Oral Answers to Questions

HEALTH

The Secretary of State was asked—

Equipment Loans

Andrew Selous: What estimate she has made of the cost to the NHS of the failure to return equipment loaned to patients in the last year for which figures are available.

Jane Kennedy: As I am sure all hon. Members would want me to do, speaking as Minister with responsibility for the health service in London, may I first pay my own tribute and express my deepest gratitude, which I know we all share, to the health and emergency services for their response last week?
	Now to perhaps more prosaic, but none the less important matters—the Department has not estimated those costs. It is for the local national health service and social care bodies to determine how best to provide equipment to meet the needs of individuals. Some equipment can be reused, subject to its condition and to any need to decontaminate it.

Andrew Selous: I am sure that the Minister will agree that public money is precious money, and I hope therefore that she will follow up the concerns of one of my constituents, a retired civil servant, who has brought to my attention the fact that many patients are loaned equipment on a short-term basis, such as chair and bed raisers, stools, helping hands and so on; that there is no follow-up for the return of that equipment—that is purely left to the conscience of the patient; and that the providers of that equipment are making money out of the NHS by the continual loan of such equipment. Will the Minister undertake to look into that to ensure that there is no waste of precious NHS resources across the country?

Jane Kennedy: I am grateful to the hon. Gentleman for raising this issue. He may be aware that in 2000 an initiative called integrating community equipment services was undertaken, through which we have placed greater emphasis on refurbishing and recycling equipment and, as he suggests, tracking the equipment that is loaned. He suggests that that is not working in his location. I would be grateful if he wrote to me specifically about that matter so that I can look into it in the detail that he is obviously requesting.

David Taylor: I endorse the remarks of the hon. Member for South-West Bedfordshire (Andrew Selous). There is certainly a problem in the east midlands, not unrelated to the fact that there appear to be no computer systems to track items that are not hugely costly individually, but are very valuable to people on the waiting lists for them. Will the Minister please investigate whether there is some way in which either a regional system or some other means could be developed to track, in particular, wheelchairs and equipment of that kind, which can lie gathering dust while other people could use them?

Jane Kennedy: I understand that the majority of services now pay particular attention to encouraging the return of such equipment and that those services have improved their decontamination, repair and maintenance systems. My hon. Friend will be pleased to hear that improved tracking systems are both enabling services to trace equipment and facilitating its return. However, given the concerns that have been raised today, I will undertake to look into this matter in some depth.

Ethical Recruitment

Peter Lilley: What measures are in place to ensure that the NHS abides by its code of practice on ethical recruitment.

Rosie Winterton: Compliance with the code of practice is monitored by NHS Employers, an organisation that works closely with strategic health authorities and trusts to ensure that the NHS abides by the code.

Peter Lilley: Can the Minister confirm that, none the less, this country imported some 15,000 nurses, largely from developing countries, in the last year for which we have figures, while exporting 8,000 nurses that we trained, largely to developed countries? Are we not at risk of being accused of hypocrisy if we spend a lot of time saying that we should give more aid to Africa, which should help its health service and train its nurses to cure the sicknesses and diseases that we deplore, when it is actually subsidising our health service by sending nurses to this country who, despite the measures that the Minister referred to, end up employed in the NHS?

Rosie Winterton: We are the only developed country that has an ethical international recruitment policy. There are about 150 countries from which we do not actively recruit, including all the sub-Saharan African countries. I am sure that the hon. Gentleman will agree that it is difficult for us to stop people applying for jobs in this country and to prevent them from coming here. All sorts of human rights issues would be raised if we were to do that. However, we are clear that the NHS does not actively recruit in developing countries that say they have problems, and we have recently extended that to cover the independent health care sector as well.

Paul Clark: I welcome the Minister's response as there is a need for a strong recruitment code in the NHS in respect of developing countries. Does she agree that there is a need for the NHS to share its expertise with such countries and those that are developing their own services? To that end, will she welcome the work of the Kent and Medway strategic health authority, which is currently hosting 10 Iraqi psychiatrists with the aim of enhancing their skills and knowledge, so that they can return to Iraq to develop their own home-grown mental health services?

Rosie Winterton: My hon. Friend is absolutely right on two points. First, many people who come to this country to work in the NHS return to their own countries, taking with them new skills and expertise. Indeed, many Governments encourage workers from their countries to do that. Secondly, the NHS has many contacts with international organisations and other countries to help to train people and improve their expertise. I have met the 10 Iraqi psychiatrists to whom my hon. Friend referred, so I congratulate his trust on facilitating that programme by working with the Department of Health. The programme was greatly dependent on the commitment of Dr. Sadik, who initiated it. It will make a real difference to the development of services in Iraq and I know how much the psychiatrists appreciate the work that is being done.

Evan Harris: I hope that the Minister will accept that I recognise the difficulties that she faces in controlling the flow, given what she said. Has she considered the British Medical Association's argument that there could be some form of restitution to countries? We know how many nurses are coming in from these countries, albeit not through active recruitment by the NHS, so could we not propose a scheme through which NHS workers could be funded on NHS salaries to volunteer—I think that they would be willing to do so—to go out in equal numbers to compensate those countries and provide their skills?

Rosie Winterton: An active programme of work is under way to do just that. The hon. Gentleman is absolutely right that it is important for us to help developing countries to develop their health care systems in exactly that way. Much of the work is carried out through the Department for International Development, which recently put about £580 million into assisting the development of health care systems. DFID has worked jointly with the Department of Health and volunteers from the NHS. Some 40 per cent. of NHS trusts now have international links to allow volunteers to go to other countries and join in with Government-funded programmes, which are proving to be extremely successful.

John Baron: Although we recognise that this is a difficult area and that some progress has been made, there is no shortage of evidence to suggest that much more still needs to be done. For example, more than 10,000 work permits were granted last year to health workers from more than 80 countries on the Department of Health's proscribed list. No wonder the BMA has called on the Government to end the rape of the world's poorest countries. Given that the NHS is only commended to use recruitment agencies that comply with its code of practice, will the Government take a further step forward and give their policy real teeth by banning the NHS from using recruitment agencies that have not signed up to the code of practice?

Rosie Winterton: We do—absolutely. Let me explain. Virtually everyone in the independent provider sector recently signed up to the code of practice. It is clear that if NHS employers find out that a trust has employed someone who has been recruited through an agency that has actively recruited in a developing country on the list of banned countries for recruitment, the agency will be removed from the trust's list. That extremely important development has taken place recently.
	Returning to the question of work permits, I should say that the policy was changed recently so that work permits could not be extended from the time of training. For example, if people have work permits for the period during which they are training as doctors, they are expected to return to their home countries and reapply for a permit if they wish to work full time for the NHS. The changed work permit policy thus reflects some concerns expressed about people moving from training straight into full-time employment in the NHS. As I have explained, we continue to keep the policy under review, but the many recent changes have led to a 28 per cent. fall in the number of nurses recruited from South Africa, for example.

MRI Scans

Kevan Jones: If she will make a statement on the use of the private sector in the provision of MRI scans in the NHS.

Patricia Hewitt: May I add my tribute to all our NHS staff who   performed with such heroism last Thursday, and also to the staff and members of the British Medical Association, who gave immediate help to those injured in Tavistock square? I am sure that the whole House will join me in thanking them for their outstanding work.
	By 2008, we will be investing in an extra 900,000 MRI scans for NHS patients, doubling the number performed last year. About a quarter of the total number of scans will be carried out by the independent sector, all of them for NHS patients, free at the point of use.

Kevan Jones: I thank my right hon. Friend for that reply. What would she say to the chief executive of the University hospital of North Durham, who wrote to me recently saying that the new MRI scanner in his hospital is considerably underemployed and has been for some time, and that if the money given to the private sector company, Alliance Medical, had been directed to the hospital, he could have increased the number of scans and reduced the waiting list to zero?
	The chief executive goes on to say:
	"We are not alone. There are a number of hospitals up and down the country that have spare capacity."
	Is not this the economics of the madhouse, or is it simple ideological dogma to increase capacity in the private sector when there is underutilised capacity in the NHS, and when my constituents have to travel 30 miles to access private health care in Middlesbrough?

Patricia Hewitt: I say to my hon. Friend, and through him to the chief executive, that it is not a question of choosing between NHS hospital capacity and independent sector capacity. We need both to reduce the unacceptable waiting times for scans and to meet our target of a maximum of 18 weeks from GP referral to hospital treatment by 2008.
	Furthermore, well before 2008, but certainly by then, University hospital of North Durham will need to use its capacity to the full, either by employing extra staff—and there is a shortage of radiologists and radiographers, which we are investing to overcome—or by making even more effective use of the NHS staff that it has. By 2008, NHS and other centres will provide an extra half a million MRI scans. The funding for that extra capacity is already pledged in the system.

Julia Goldsworthy: The use of the private sector is designed to cut waiting times. The NHS chief executive, Nigel Crisp, said in a recent meeting with MPs that he was confident that by 2008 the NHS will meet the target of no one waiting more than 18 weeks. As the Government do not routinely collect data on waiting times for diagnostic tests, will the Secretary of State undertake to publish the information on waiting times that enables the Department to be confident that the target will be met?

Patricia Hewitt: The target for 2008 starts with the GP referral and ends with the hospital treatment. It will therefore involve measuring and reducing the hidden waiting times, which were never counted by the Conservatives, for diagnostics. By March next year at the latest, we are confident that the maximum wait for a CT or MRI scan will be 26 weeks. By March 2007, the maximum wait for all scans will be no more than 13 weeks. We are making good progress and can see the benchmarks. As more information becomes available, we will, of course, publish it.

Kelvin Hopkins: My right hon. Friend may recall that I raised this question with the Prime Minister some months ago, and I echo entirely the point made by my hon. Friend the Member for North Durham (Mr. Jones). Luton and Dunstable hospital is in the same situation. If my right hon. Friend is concerned to maximise the use of scans, why is funding not being provided to the hospital so that it can staff its own scanners, which are coming on stream?

Patricia Hewitt: My hon. Friend is aware that we have more than doubled our investment in the NHS. By 2008, that funding will have increased to an unprecedented £92 billion a year. That includes additional funding for MRI scans and the other diagnostics that are needed.
	I stress again that it is not a question of choosing between an increase in NHS MRI capacity and an increase in independent MRI scans. We need both. The additional capacity for MRI and other scans that is being made available to NHS patients from the independent sector is over and above what the NHS can provide. That is made possible in particular by using radiologists and other staff from other parts of Europe and South Africa to supplement the staff available to the NHS in our country. It is good news for NHS patients that we are cutting the MRI waiting times.

NHS Hospital Trusts

George Young: What the overall financial status of NHS hospital trusts in 2003–04 was; and if she will make a statement.

Patricia Hewitt: The Government have delivered record increases in investment for the NHS—funding that has been used to deliver substantial improvements across a range of services. In 2003–04, the NHS recorded a small surplus of £73 million. In the same year, 204 NHS trusts were in financial balance or had a surplus and 65 trusts posted a deficit.

George Young: The Secretary of State will know that many NHS trusts and primary care trusts, particularly those that do badly out of the funding formula, have been able to reach NHS targets and deliver improved levels of care only by running up substantial financial deficits. Will the right hon. Lady give the House an absolute assurance that the new financial imperatives under which the trusts are now working will not result in unacceptable levels of patient safety?

Patricia Hewitt: I know that the right hon. Gentleman will welcome the fact that his primary care trust has had an increase in its allocation from £1.4 billion in 2002–03 to £2.3 billion in 2007–08. There are enormous and unprecedented amounts of money going into the NHS. The reforms that we are making to the system, including money following the patient as patients are enabled to exercise greater choice and control over their health care, will improve patient safety and care rather than damage it.

Meg Hillier: Does my right hon. Friend agree that foundation status has brought great freedoms to some hospitals, including Homerton hospital in my constituency, which has excellent financial management and excellent leadership? I would be glad if she were to comment on her recent visit to that hospital.

Patricia Hewitt: I had the opportunity recently to visit the excellent Homerton hospital in my hon. Friend's constituency. I am delighted that she has given me the opportunity to place on the record my admiration for its chief executive who, together with her staff, is delivering superb patient care. I especially welcome the fact that the hospital has taken advantage of its new status as a foundation trust to make a rapid decision to invest in and build a new perinatal centre to deal with the fact that in my hon. Friend's constituency, and more broadly in Hackney, there is a high level of premature births, with all the consequential effects that that has for the life chances of those children. Excellent work is being done.

Nicholas Soames: Is the right hon. Lady aware that when the Princess Royal hospital in my constituency merged with the Brighton and Sussex NHS Trust, it did so with a substantial debt? The trust has not recovered from that debt, and because of a number of changes that have been made and a difficult financial situation, it finds itself in some difficulty. Will the right hon. Lady consider the position and when trusts merge ensure that careful attention is given to whether debts should be written down to enable a new trust to start with a clean sheet of paper?

Patricia Hewitt: I am not aware of the specific situation of the two trusts before and since the merger to which the hon. Gentleman refers. Given the substantial increase in NHS investment that has taken place in every part of England, it is important that all NHS trusts live within their means. I will look at the specific situation of the hon. Gentleman's trust and write to him about that. I would not generally favour a writing off of historic debts before or after a merger, for the simple reason that that would have to be carried by other parts of the NHS where services might well suffer as a result.

Michael Penning: Will the Secretary of State come to Hemel Hempstead and visit our excellent hospital, which I am sure is just as good as the Homerton hospital? Sadly, we have been snubbed with funding. This year alone, as the right hon. Lady knows, we will be £30 million in debt. Doctors, nurses and clinical staff will be made redundant. Will she come to Hemel Hempstead and explain to my constituents why the Government are doing this to them?

Patricia Hewitt: I am in fact meeting the hon. Gentleman and several of his colleagues from Bedfordshire and Hertfordshire later this afternoon to discuss the position in more detail. The national health service in his constituency and right across Bedfordshire and Hertfordshire is receiving, again, unprecedented increases—a 7 per cent. increase in funding over the past year alone. There are serious financial problems right across the health service in Bedfordshire and Hertfordshire. Those must be addressed by the local trusts, and my Department is working with the strategic health authority and the local trusts to resolve those financial problems.

Steve Webb: Under patient choice, if a hospital trust loses business it will get into financial difficulty. When the Department is asked whether the Secretary of State will allow a trust, in extremis, to go to the wall, the answer has been uncertain. Sometimes she has said yes, in extremis a trust can go to the wall. On other occasions it has been said that if there is an accident and emergency department attached, perhaps the casualty department will be kept going. I shall give the Secretary of State the opportunity to make the position clear now, because trusts need to know where they stand. Will trusts, in extremis, be allowed to go to the wall—yes or no?

Patricia Hewitt: As a Labour Health Secretary, I shall certainly not force patients to use services that they do not want to use, nor will I allow any part of our country to find itself without accident and emergency services or other health services that people need. The detailed guidance, both on patient choice and on payment by results, will be published in due course, but there will be departments that patients do not want or need to use and those, I have no doubt at all, will either close or be reorganised as a result.

Andrew Lansley: Opposition Members join the Secretary of State and the Minister in a warm appreciation of the magnificent response of NHS staff to the tragic events last Thursday. I think of hospitals such as University College hospital and St. Mary's, which I have visited in the past year, and, indeed, the Royal Free—they all have financial pressures with which they have to deal.
	This is an important issue for many those hospitals. In 2003–04, 106 NHS bodies ended the year in deficit, up from 71 the year before. Can the Secretary of State say how many NHS bodies were in deficit at the end of the 2004–05 financial year? She says that much more money has gone into the NHS—but as we need more capacity in the NHS, can she explain why front-line services are being cut not just in Bedfordshire and Hertfordshire, but in Leeds, Bradford, South Teesside, Suffolk, Hampshire, Surrey, Sussex and Cornwall?

Patricia Hewitt: All over the country national health services and care for patients have been improving, compared with what we inherited in 1997. I note that eight years ago there were 384 people waiting in Hinchingbrooke Health Care Trust for more than nine months. Today, that figure is zero. With regard to 2004–05, we are anticipating a deficit of around £140 million. That is the total picture. It is around 0.2 per cent. of the total NHS budget. It will be considerably more serious than that for individual trusts, but we will not publish the details of which trusts are in deficit until the 2004–05 figures have been audited.

Andrew Lansley: There are two essential questions: where is all the money going, and does the Secretary of State know how bad the problem is? The National Audit Office said that auditors expressed concern about the financial standing of one third of NHS trusts. A dozen strategic health authorities are reported to have overspent in the last financial year. Leaving aside the net figure of £140 million that she has just cited, what does the right hon. Lady expect to have been the aggregate overspend in the last financial year? It was £366 million in the 2003–04 financial year. I have received reports that that figure has more than doubled, and that it is £800 million in 2004–05. What level of financial support has been provided by the Department, directly or through the NHS bank, to offset those burgeoning deficits?

Patricia Hewitt: Every year, all kinds of wild figures are published in various places about the overall deficit. I have just given the figures that have been audited for 2003–04, and we will give the detailed figures for 2004–05 when the audit is complete. The net figure, however, is less than a quarter of 1 per cent for the total NHS budget. The hon. Gentleman seems determined to ignore the unprecedented increase in national health service funding that we have made available across the country. The minority of trusts with serious financial problems are now being helped to put the necessary financial recovery plans into place, where necessary with the help of the NHS bank.

Andrew MacKinlay: Would the Secretary of State mind if I said something controversial? Listening to that exchange, it occurred to me that one problem that is not discussed, particularly by the two Front-Bench teams, is the fact that since 1975 there have been 27 reorganisations of the national health service. What people want most of all is a settlement. When people paint the Forth bridge, they normally finish the job before they start again. Under both Tory and Labour Governments we have altered the NHS. When a new Minister comes in, he undoes what his predecessor did—but what patients want above all else is a settlement and an agreement. The two Front-Bench teams should get together and agree at least some norms to achieve a settlement of the NHS so that we get a better product.

Patricia Hewitt: I agree most warmly with my hon. Friend. At least we can agree on the need for long-term sustained increases in funding for our national health service. That is exactly what we have been delivering, and those record increases in funding will continue until 2008 and, indeed, beyond. I hope that my hon. Friend will join me in welcoming that increased support and the stability of funding that we are making available to the NHS. I only regret that the Opposition are unable to do so.

In-patient Admissions

Shahid Malik: What changes there have been since 2000 in the number of patients waiting more than six months for in-patient admission.

Patricia Hewitt: The national health service is continuing to make huge progress in providing faster access to hospital care. In May 2000, 282,397 patients were waiting more than six months for hospital operations. That has now been reduced to just below 50,000 patients. By the end of this year, there will be no patients waiting more than six months for in-patient treatment.

Shahid Malik: Can I commend and congratulate my right hon. Friend on the progress thus far on waiting lists? I welcome the target of 18 weeks for waiting lists, which is obviously very different from the position when the Tories were in power, when it was 18 months. Does my right hon. Friend agree that public accountability is central to public confidence? In that context, how does she propose to deal with hospitals that fail to meet their obligations vis-à-vis targets?

Patricia Hewitt: My hon. Friend makes an extremely important point about accountability. We are strengthening the accountability of NHS hospitals and other trusts to their local communities through the membership and governance structure of foundation trusts and other means for other NHS trusts. May I take the opportunity to congratulate Dewsbury and District hospital in my hon. Friend's constituency? I recently visited the hospital where, in direct response to requests from women in the community, a midwife-led midwifery unit is doing excellent work and has recently won a modernisation award.

Julian Lewis: What does the Secretary of State think will be the effect on waiting times for in-patient treatment in the New Forest and in Romsey if the cottage hospitals that are under threat of having their in-patient beds closed after a bogus consultation by the local primary care trust do in fact lose those beds? May I thank her for the response given by the Under-Secretary of State for Health, the hon. Member for Don Valley (Caroline Flint) to the Adjournment debate on this subject last week, and ask her, on behalf of cross-party MPs from the New Forest and Romsey area, for a meeting to discuss this truly desperate situation?

Patricia Hewitt: I understand that a consultation is taking place and that a close look is being taken at how best to provide services, particularly for elderly patients, in the hon. Gentleman's constituency and nearby. I will take the opportunity to have a look at the record of the Adjournment debate, which I have not seen, and I will ensure that he and his hon. Friends are seen, if not by me, then by one of my ministerial colleagues.

Edward Balls: I congratulate my right hon. Friend on the progress that she has outlined on reductions in patient waiting times. Does she think that we would have made that progress had we allowed NHS funds to be diverted from the NHS to subsidise people to jump the queue and go private by adopting the Conservative proposal for a privatising patients' passport?

Mr. Speaker: Order. We will leave that question alone. I call David Burrowes. [Interruption.] Order. The hon. Gentleman has withdrawn his question.

GP Contract

Christopher Fraser: What assessment she has made of patient satisfaction following the implementation of the new general practitioner contract.

Liam Byrne: There is no doubt about the success of the new contractual arrangements. Patients are receiving better care, quicker access to GPs and nurses, and more services delivered locally. GPs are more satisfied because they are better rewarded for offering more services and for delivering better care.

Christopher Fraser: Does the Minister accept that patients registering with the practice rather than with a specific GP causes concern, as my constituents want their personal care delivered by someone whom they know and ask for?

Liam Byrne: The new contract underpins some important changes in primary care. As I outlined, that care involves better and faster treatment, as well as delivering more specialisms and wider services locally. Part of the reason for ensuring that registrations are often with practices as opposed to individuals is that more GPs are engaging in sub-specialisms. There are now 1,400 GPs with a sub-specialism. We promised to deliver 1,000 under the NHS plan by 2004, and we achieved the target a year early.

Jonathan R Shaw: Patients in Snodland are delighted with the new contract. Indeed, I opened a £2 million new medical centre in Snodland just the other day. On the same day, there was a ground-breaking ceremony for a £5 million new medical centre. What else is my hon. Friend going to do for my constituency?

Liam Byrne: I congratulate my hon. Friend on that excellent news. As he says, the new GP contract is underpinning a revolution in primary care. It is absolutely essential in helping GPs to play their part in cutting mortality rates. It is no accident that death rates from cancer are down by 12 per cent. and that death rates from coronary heart disease are down by 27 per cent.—it is because the policy is right and is backed by the investment that patients such as those in my hon. Friend's constituency rightly deserve.

Hywel Williams: Would the Minister concede that there is huge dissatisfaction in rural areas with the delivery of the out-of-hours service? What steps has he taken to ensure its effective and efficient implementation?

Liam Byrne: I am grateful to the hon. Gentleman for that question. I know that he has some expertise in the subject and I welcome the speech that he made, to which I listened carefully.
	It is worth pointing out that before the new GP contract was introduced, fewer than 5 per cent. of GPs provided their own out-of-hours cover. The new arrangements will ensure that the skills mix and team working that are well established in both primary and secondary care apply out of hours, accessed through a single call to NHS Direct.

Brian Iddon: The national Hepatitis C Trust has informed me that several patients have approached it after being either misdiagnosed by their GP or waiting an inordinate amount of time to be referred for either a biopsy or treatment. What processes exist to link patient feedback to GPs' continuing professional development? How will the new GP contract and appraisal system aid that activity?

Liam Byrne: The hepatitis C action plan is an important part of that, but it is up to primary care trusts to ensure that their contractual arrangements are audited effectively so that remedial action is taken when quality is found not to be up to the standard that it needs to be.

James Brokenshire: There is a question about responsiveness. Following the previous question about flexibility, how flexible is the contract? Can it change to reflect the increased prevalence of other chronic conditions such as hepatitis C? What role do patients and the feedback from patients play in that?

Liam Byrne: Primary care trusts are the local health professionals responsible for ensuring that needs in their communities are addressed. That is why they have a responsibility to audit the care that general practices provide in their area and to take remedial steps whenever they find that it is not up to the mark.
	I stress that the new GP contract is delivering some important gains for constituencies throughout the country. The fact that 99.9 per cent. of people see a GP within 48 hours or a primary care professional within 24 hours is due to the new contract. Achievement in the quality in outcomes framework exceeds 95 per cent. Again, that is down to the new contract. Those changes are important. I am sure that that is why the chair of the British Medical Association's General Practitioners Committee said:
	"I believe the introduction of the new GP contract marks the beginning of a change that will be better for patients and better for everyone working in general practice."
	That includes people in the hon. Gentleman's constituency.

Andrew Murrison: The Under-Secretary knows that one aspect of traditional primary care that is most highly valued by patients is GP support for community hospitals. Yet following the introduction of the new GP contract, GPs' out-of-hours cover for community hospitals has been greatly reduced. What assessment has he made of the threat to community and cottage hospitals following the introduction of the new contract? What will he do to ensure their long-term survival?

Liam Byrne: As the hon. Gentleman knows, about 50 community hospitals were announced as a manifesto commitment.
	However, I want to be clear about the impact of the new GP contract on out-of-hospital care. The Department of Health has made it clear that primary care trusts must fulfil national quality requirements when they put arrangements in place. We can be confident that those arrangements will be satisfactory only because of the unprecedented investment that the Government are putting into primary care, not only the £54 billion that is available for local management through primary care trusts but the £322 million extra that was provided to ensure adequate out-of-hours cover.

Cancelled Operations

Julie Kirkbride: How many operations were cancelled in (a) Worcestershire NHS Acute Trust and (b) England in the last year for which figures are available.

Rosie Winterton: The Department of Health collects figures on operations that have been cancelled for non-clinical reasons on either the day of admission to hospital or after admission, on the day when the patient is admitted. There were 943 operations cancelled at Worcestershire NHS Acute Trust during 2004–05. Nationally, the figure was 68,576.

Julie Kirkbride: Is not the Minister remotely ashamed of the figures that she has just announced, given the human misery that they represent? Does she realise how upsetting it is for hospital staff to have to ring people on the day of a cancelled operation to say that they should not come in, despite their acutely painful condition? Does she appreciate the trouble that it causes the people involved, who might well have suffered a sleepless night and made extensive arrangements with their friends and family to cover their time in hospital? Does she not accept that the Government's focus on targets, targets, targets, instead of clinical priorities makes those figures so shameful?

Rosie Winterton: It would be interesting to know which targets the hon. Lady would like to scrap. I would have thought that she would be congratulating her local NHS staff on reducing the number of cancelled operations from about 2.3 per cent. in 2004–05 to 1.9 per cent. now. That figure is still higher than the national average, but her local staff—whom I hope she will support—are working on the issue of bed management within the local trust. One of the difficulties has involved increased admissions through accident and emergency units. The purpose of the work is to ensure that people are discharged early from hospital and not kept there inappropriately, and that there are no inappropriate admissions through A and E. I would have thought that the hon. Lady would congratulate her local NHS staff on that work, because they are working very hard to give the highest quality services to patients.

Michael Foster: Will my hon. Friend explain how the number of cancelled operations in Worcestershire would have been reduced if the Conservatives had won the last election and taken £1 billion out of the national health service budget—

Mr. Speaker: Order. That is not worth answering.

Peter Luff: The Minister will know that the Worcestershire Acute Hospitals NHS Trust is under great financial and practical pressure, and that it regularly operates at or beyond its designed capacity, hence the problem with cancelled operations. In that context, will she explain how the proposal to close two wards at Evesham community hospital, to transfer services away from that hospital and to remove GPs from caring for patients there will result in the increase in capacity that Worcestershire's health economy so desperately needs?

Rosie Winterton: First, I should point out that the local PCTs in the hon. Gentleman's area have received about £43 million extra funding this year. I understand that the issue that he has raised is still being considered. I know that it has been the subject of an Adjournment debate, and I gather that it has been under consideration since that time. I am perfectly prepared to write to the hon. Gentleman to update him on the situation if that would be helpful.

Patient Choice

Patrick McFadden: If she will make a statement on policies to increase choice for NHS patients.

Patricia Hewitt: From the end of this year, national health service patients will be able to choose from four or more hospitals when referred by their general practitioner. By 2008, they will be able to choose from any health care provider that meets NHS standards and prices.

Patrick McFadden: I thank the Secretary of State for her reply. Does she agree that, where choice has been introduced so far—for example, in offering patients a shorter waiting time in exchange for having their operation done somewhere other than their local hospital—it has been a success? Does she also agree that while choice will not operate in exactly the same way in the public and private sectors, it is essential that as the Government increase investment in the NHS to record levels, it should be matched by the empowerment of patients to ensure that they have increased control over the timing, nature and location of their treatment?

Patricia Hewitt: I entirely agree with my hon. Friend. Patients are telling us very clearly that they want more choice and more control over their health care. We can see the policy of increased patient choice working very well in the city of Wolverhampton in my hon. Friend's constituency. For example, since the beginning of this year, patients there have had a choice of two or more hospitals for cataract operations, which has helped to bring the maximum waiting time for such operations down to three months, four years ahead of the target that we set in the NHS plan. Similarly, since April, NHS patients in Wolverhampton have had a choice of two or more hospitals for heart treatment and cardiac surgery, which improves the quality of care available to them.

David Tredinnick: Does the Secretary of State agree that choice for NHS patients will be dramatically reduced if the food supplements directive is introduced in its present form? A decision on that matter was upheld by the European Court today. What will she do to secure an opt-out from the directive? Does she agree that many hundreds of safe nutrients will be taken off the shelves as a result of its introduction? The measure is deeply unpopular and the Government have done nothing like enough to get involved and to stop it.

Patricia Hewitt: I discussed this very matter with Commissioner Kyprianou some two weeks ago, and my hon. Friend the Under-Secretary of State for Health, the hon. Member for Don Valley (Caroline Flint), discussed it with patients' representatives and the industry just last week. We will continue to press for the lightest touch possible implementation of the directive, and we will ensure that the providers who are already making available a wide and growing choice of vitamin and food supplements to the public in Britain and elsewhere can continue to do so. That is what the providers want to be able to do, it is what the public want, and we will ensure that they can continue to get it.

Doug Naysmith: Does my right hon. Friend intend the choice agenda to apply to patients suffering from mental health conditions? If so, how does she envisage that it will work?

Patricia Hewitt: The commitment that we have made in relation to choice, such as the choice of four or more hospitals by the end of this year, applies specifically to in-patient treatment. As my hon. Friend will be aware, there is rightly a growing emphasis in the treatment of patients with mental illness on treating them wherever possible in their own homes and in the community. There is a much wider agenda, however, to ensure that people with depression and other mental illnesses can exercise more choice and control over their treatment, for instance by having a range of different therapies available to them. That is widely welcomed, not only by users of mental health services but carers and families of mental health patients.

Patrick McLoughlin: A year ago, my constituents had the choice of going to see their GP on a Saturday morning. When will they get that choice back?

Patricia Hewitt: Following the negotiation of the new GP contract, primary care trusts are making available to patients and users a range of out-of-hours services, including those provided by our ambulance service and emergency care practitioners. The new GP contract responded to the strongly expressed views of most GPs that they did not want to continue being responsible for providing that out-of-hours service themselves. That is why it is essential that primary care trusts in the right hon. Gentleman's constituency and elsewhere ensure that there is proper provision for out-of-hours service. It is also why we are continuing to expand NHS walk-in centres, which are available every day of the week, every day of the year.

Paul Farrelly: With respect to patient choice in the NHS, may I raise with my right hon. Friend the case of my constituent, Lynne Burton, who suffers from advanced breast cancer? At the moment, Lynne cannot be prescribed Herceptin, the drug of her consultant's choice, because she does not meet the rather restrictive criteria, and if she did, local funding might be problematic. When will the Department relax those criteria and license Herceptin for early-stage breast cancer to give women a better choice and a chance of fighting that terrible disease?

Patricia Hewitt: My hon. Friend raises an extremely important point. We are already urgently considering referring Herceptin to NICE for appraisal in relation to use in early-stage treatment of breast cancer. We have also asked Professor Mike Richards, our national cancer director, to consider the issues surrounding the introduction of Herceptin across the national health service, including managing the potential gap between licensing the use of the drug for early-stage treatment and publication of a NICE appraisal. He will report back to us in the autumn, and we will then make appropriate decisions.

Simon Burns: May I remind the Secretary of State, before she seeks to rewrite history, that it was her Government in 2001 who signed up to the food supplements directive lock, stock and barrel, without questioning any of its contents? May I also remind her that it is only due to the all-party group, the Opposition parties and the help of Carole Caplin that the Government have sought to get involved at this late stage? Given that we now hold the presidency of the EU for six months, is not it time for her to act on her Prime Minister's instructions and start to fight for Britain's interests and for those hundreds of thousands of people who need and rely on food supplements and vitamins, rather than pretending that the fault does not lie at her Department's feet for doing nothing for four years?

Patricia Hewitt: It was, of course, this Government who helped to establish the four-presidency, now six-presidency, initiative to ensure that regulation in the European Union was proportionate, appropriate and light-touch in its implementation. As a user of vitamin and food supplements myself, I certainly intend to ensure that we—as holder of the presidency of the European Union for six months and, separately, as representative of the United Kingdom's interests—secure the implementation of the directive, which has now been upheld by the European Court of Justice, in a sensible and light-touch manner so that users and the public here in Britain can continue—[Interruption.]

Mr. Speaker: Order. The hon. Member for West Chelmsford (Mr. Burns) asked a favour of me: he asked me to allow him to put a supplementary question. Now he interrupts the Secretary of State when she replies. That is bad manners, and I will not allow it. Has the Secretary of State finished her reply?

Patricia Hewitt: I wanted to make one more point, Mr. Speaker.
	The industry has already submitted 500 dossiers on different food supplement products with no great difficulty.

Alzheimer's Disease

Nicholas Winterton: What drugs are available on NHS prescription for Alzheimer's disease patients.

Jane Kennedy: This is a bit of a low blow. It is only because I have a high regard for the hon. Gentleman that I do not simply refer him to the answer I gave my hon. Friend the Member for Stafford (Mr. Kidney) last month.
	As the hon. Gentleman knows, four drugs are licensed for the treatment of the effects of Alzheimer's disease: Aricept, Exelon, Reminyl and Ebixa.

Nicholas Winterton: What a lovely answer from a most charming Minister. May I ask her, however, why the draft guidance from the National Institute for Clinical Excellence states that those four valuable drugs, which could bring great benefit to those suffering from Alzheimer's disease, should not be prescribed on the national health service?
	Two meetings were held here last week, in which the Alzheimer's Society was involved. At both, horror and condemnation of the guidance were expressed. Given that professional psychiatrists were not allowed to sit on the appraisal panel and that the advice of those who sent the panel evidence has been ignored, will the Government intervene immediately and insist that the drugs be prescribed to these vulnerable people on the NHS without delay?

Jane Kennedy: The original assessment of the drugs, issued in 2001, still applies, and patients already receiving them will continue to do so. NICE employs a very transparent process for the appraisal of drugs. It gives stakeholders, including patients' groups such as those that the hon. Gentleman mentioned, an opportunity to make representations on the economic model as well as commenting on the proposals themselves. I would expect NICE to take careful account of all such comments before making its final appraisal.

Eric Illsley: I am grateful to the Minister for that information, but I remind her that last week was Alzheimer's awareness week. Many Members will have visited local Alzheimer's societies, as I did. There is considerable apprehension as they await NICE's decision, which I understand is imminent. May I ask the Minister again to use whatever influence she has to try to ensure that those drugs remain available to Alzheimer's sufferers on the NHS?

Jane Kennedy: As I said last time the subject was raised, NICE has an international reputation. It will decide on the form of its final guidance taking account of all views expressed to it as part of the consultation, and we trust it to make informed, fully considered recommendations on the drugs. I know that there will be intense interest in the matter, and I am sure that we shall return to it in the future.

Sandra Gidley: When taking into account the health professionals who use these drugs, will the Minister acknowledge that little research that is applicable to daily use has been undertaken since the original guidance was issued, and that it was a complete surprise when a different decision was taken? If, as is widely expected, the NICE decision is negative, will she allow the drug to be available for an ongoing period, in order to enable an in-depth study that will prove once and for all whether these drugs are effective? Such a study has not yet been undertaken.

Jane Kennedy: I do not accept the premise on which the hon. Lady's question is based. I repeat that the existing guidance, produced in 2001, remains in place until the final guidance has been issued. She should not jump to conclusions about what that final guidance should be. We should wait and allow NICE to take its time, and to reach a decision on the proper advice and guidance that it will issue in due course.

Waiting Times

Simon Hughes: What the difference is between average waiting times of those referred for treatment (a) by their local general practitioner and (b) elsewhere within an NHS trust in (i) London and (ii) England; and if she will make a statement.

Caroline Flint: Waiting times for referrals other than those made by a general practitioner are not collected centrally. Average waiting times for patients waiting for their first out-patient appointment following GP referral have fallen to seven weeks, from 7.7 weeks, in March 2000 nationally, and to 7.5 weeks, from 7.9 weeks, in London. By 2008, no patient will have to wait more than 18 weeks for hospital treatment, starting from referral to point of treatment.

Simon Hughes: Will the Minister consider that those in Southwark who are referred by their GP to the orthopaedic department at Guy's and St. Thomas' have to be treated within 13 weeks, but that there is no time limit for those who are referred from elsewhere in the hospital? In the words of the chief executive, that does not
	"ensure equal access to patients regardless of source of referral."
	Such an arrangement is clearly inequitable and not based on clinical need. Will she do something about it?

Caroline Flint: I am pleased to say—perhaps the hon. Gentleman did not listen to my earlier reply—that we are doing something about it. We are able to introduce for patients a wait of no longer than 18 weeks from first referral to treatment, which means that we can cut out the hidden waiting lists that often emerge within our health system. Because we have not only reformed the health service but resourced it, we are confident that we can achieve that.

Computer Misuse

Tom Harris: I beg to move,
	That leave be given to bring in a Bill to amend the Computer Misuse Act 1990; and for connected purposes.
	In moving this motion, may I first of all pay tribute to the work undertaken by the all-party group on the internet, which carried out a thorough review of the Computer Misuse Act 1990, and whose recommendations form the basis of the Bill that I present today? I want particularly to thank my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt). He presented a similar Bill to the House in March of this year, but in the end it was defeated by the timetable for the general election.
	My Bill will revise the 1990 Act to take account of commitments made in European instruments in respect of combating and effectively punishing attacks against computers, and it will update the Act in other areas. It will amend section 1(3) to increase the term of imprisonment for a related offence from six months to two years. It will amend section 3(7) to increase the term of imprisonment for a further related offence from five years to 10 years. It will amend section 3 in order to clarify that all means of interference with a computer system are criminalised. In particular it will ensure that adequate provision is made to criminalise all forms of denial-of-service attacks. It will also give effect to article 6(l)(a)(i) of the convention on cybercrime, which requires criminalisation of the distribution of, or making available of, a computer password through which a computer system is capable of being accessed, with intent to commit an offence.
	This Bill will, I hope, meet with the House's approval. It contains only six clauses, has no financial implications, implements measures that have been approved by Ministers and Parliament and is, I hope, relatively simple. As last year's report by the all-party group on the internet demonstrates, these measures already have cross-party support. I trust this will remain the case after I finish my speech. As the report pointed out and as every Member of this House will doubtless accept, the worldwide web has changed out of all recognition in the past 15 years, as has the nature of cybercrime. The media like to imagine that hacking, virus proliferation and denial-of-service attacks using e-mail are the product of bright but lonely and socially challenged teenagers sitting in their bedrooms. That is an outdated, inaccurate and, I think, dangerous notion. Those who regularly and increasingly hold website operators to ransom are more likely to be members of an organised crime syndicate than the school computer club. It is time that cyber crime was recognised for the serious crime that it is.
	Following the recent sentencing of teenager Joseph James McElroy to 200 hours of community service for breaking into a US Government laboratory system, detective chief superintendent Len Hynds, the former head of the national hi-tech crime unit, called on the Government and the courts to reform sentencing policy to reflect the damage caused by hackers breaking into government and private sector computer systems. He said:
	"The internet has grown up and we need to say to people who think its fun to rifle through people's private files that they are actually committing a crime".
	My Bill seeks to specify a new offence of denial of service. A denial-of-service attack occurs when a deliberate attempt is made to stop a computer performing. Examples include attempts to flood a network, thereby preventing legitimate network traffic; attempts to disrupt the connections between two machines, thereby preventing access to a service; attempts to prevent a particular individual from accessing a service; and attempts to disrupt services to a specific system or person.
	Denial-of-service attacks can essentially disable one's computer or one's network. Some denial-of-service attacks can be executed with limited resources against a large, sophisticated site. For example, an attacker with an old PC and a slow modem may yet be able to disable much faster and more sophisticated machines or networks. One form of such attack could mean a large number of remote computers being orchestrated to attack a target at the same time. In some cases, the attacks overwhelm the connecting links to a machine rather than the machine itself. That can result in significant collateral damage that extends beyond the machine being attacked. Denial-of-service attacks are extremely common on today's internet. At the lower end of effectiveness, the blips in traffic are hardly noticeable, but we are told of cases at the other end in which large university networks have been made unusable for hours at a time.
	The chief constable of Greater Manchester, Michael Todd, was bombarded with thousands of threatening e-mails in a denial-of-service attack shortly before the   May Day bank holiday this year. At one point, 2000 e-mails were being sent every hour. The purpose of the attack was to crash the force's computer systems through the volume of e-mails being sent. Cambridgeshire police were subject to a similar denial-of-service attack almost two years ago, when thousands of spam e-mails told recipients that their credit cards were about to be charged for an iPod that they had purchased unless they phoned a customer service number. The customer service number turned out to be the switchboard at Cambridgeshire police, which was deluged by thousands of people who had received the hoax e-mail. Closer to home, a gun control website contacted me two years ago to complain that one of my constituents, a gun enthusiast, had bombarded the site with so many e-mails over a short period of time that their server had crashed.
	The Computer Misuse Act 1990 came into force on 29 August 1990 and specifies offences for attacks against computer systems or data. Criminal denial-of-service attacks are regularly made on gambling websites both in the United Kingdom and elsewhere. Such attacks are invariably accompanied by demands for amounts between £10,000 and more than £100,000 in order to make the attacks stop. The impact on gambling businesses has been severe. The national hi-tech crime unit has become involved in the investigations, but the perpetrators are believed to be based abroad, which sets some limits on what can be achieved quickly.
	The second part of the Bill deals with the length of sentences. At present, offences under section 1 of the Computer Misuse Act 1990 can be dealt with only in a magistrates court, where the maximum penalty is six months in prison and/or a fine of £5,000. A conviction in a higher court currently applies only to offences defined in sections 2 and 3 of the Computer Misuse Act. In those cases, the maximum penalty is five years in prison or an unlimited fine.
	By increasing the tariff on these crimes, the House would be sending a message to the courts and the public prosecution service that these crimes must be taken seriously and that, where appropriate, custodial sentences must be applied. Home Office figures show that, when an offence under the Computer Misuse Act is the principal offence with which someone is charged, only about a third of those found guilty are given custodial sentences. When such an offence is not the principal offence, the proportion is very small indeed.
	It is regularly claimed that the cost of cleaning up virus or worm attacks runs into billions of pounds. The current level of sentences does not reflect the seriousness of such offences. This Bill would therefore raise the maximum sentence for a conviction under section 1 of the 1990 Act to two years. That would have a number of indirect benefits. It would make an offender subject to extradition procedures, and also make it possible to prosecute for a criminal attempt, even where such an attempt had not succeeded.
	Before I conclude, I wish to draw the House's attention to a recent NOP survey conducted on behalf of the national hi-tech crime unit. It estimates that the minimum cost of the impact of high-tech crime on UK-based companies with more than 1,000 employees is no less than £2.5 billion every year.
	As the worldwide web grows both in size and in its influence on all our daily lives, the threats posed to all of us by cybercrime also grow. Although high-profile denial-of-service attacks have been made against e-commerce and, especially, gambling sites, the UK Government and the country's critical infrastructure are also vulnerable. It is essential that we have a law in place to make prosecution possible when offences are committed, because that will send the strong and unambiguous message that e-crime will be treated with the utmost seriousness.
	I commend the Bill to the House.
	Question put and agreed to.
	Bill ordered to be brought in by Mr. Tom Harris, Mr. Ian Austin, Mr. John Spellar, Gordon Banks, Michael Gove, Jessica Morden, Ms Emily Thornberry, David Mundell, Derek Wyatt, Charles Hendry, Mr. Alan Reid and Michael Fabricant.

Computer Misuse

Mr. Tom Harris accordingly presented a Bill to amend the Computer Misuse Act 1990; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 2 December, and to be printed [Bill 42].

Opposition Day
	 — 
	[5th Allotted Day]

Tax Credits

Mr. Speaker: I inform the House that I have selected the amendment in the name of the Prime Minister.

George Osborne: I beg to move,
	That this House commends the Parliamentary Ombudsman and the Citizens Advice Bureau on their reports on Tax Credits; notes with concern their conclusions that many thousands of low income families are suffering financial hardship as a result of the serious problems with the administration of tax credits; further notes the huge cost to the taxpayer of these problems; calls on the Government to implement as soon as possible all the Ombudsman's recommendations to improve the tax credit administration; in particular calls on the Government to adopt the Ombudsman's recommendation to set up a statutory test for recovery of excess payments of tax credits consistent with the test that is currently applied to social security benefits, with the right of appeal to an independent tribunal and calls on HM Revenue and Customs to suspend all recovery of tax credit overpayments until this reform has been completed; and calls on the Chancellor of the Exchequer to explain the Government's failure to provide low income families with the service they deserve; and requests that he conduct a fundamental review of the structure and administration of tax credits, as recommended by the Ombudsman.
	This is my first opportunity in the House to express my sadness and sorrow to the victims of last week's murderous bombs, and to the injured who continue to suffer. I have just seen pictures on the television news of those who died. That brings home in a very graphic way how many lives have been so cruelly snatched away from us. I think that is an appropriate opening to an Opposition day debate, as democratic debate must continue undaunted.
	Today's debate is about people like Mr. Crow and his family, from Dover. They have two kids, a mortgage and no spare cash. Mr. Crow recently took a job as a carer and became entitled to tax credits. When his pay rose, he did what he was supposed to do and informed the Inland Revenue. He was told that the increase in his pay was to be disregarded. A year later, he has been told that he has been overpaid and that he now must pay back the difference. His working tax credit has been reduced from £35 a week to £2.44 for the entire month. That family has been forced to go into debt or lose their home.
	This debate is also about people like my constituent Helen Thompson, a single mother. She contacted the helpline and was told that she could keep an overpayment of £3,000, even though she had offered to pay it back immediately. Out of the blue, the Revenue demanded that money back, with the result that she could not meet her child care costs. She faced losing her job, and only the intervention of my constituency office caused the Revenue to change its position.
	This debate is also about people like the lone parent in the report by Citizens Advice, who received no tax credit payments whatsoever for the last few weeks of the financial year. She had to resort to Salvation Army food parcels to feed her children.
	Every Member of the House knows that, sadly, those are not isolated examples. Citizens Advice handled 150,000 cases in the last year alone. The parliamentary ombudsman now spends a quarter of her time on tax credit cases, and the Revenue has recently admitted to me in writing that it is dealing with 51,000 complaints, 9,000 of which were referred to it by Members.
	The blunt truth that the Government have to confront is that the tax credit system
	"is failing the very families most in need of extra money, causing hardship that the system is designed to prevent, and making it more difficult for people to save or to hold down a job, rather than supporting saving and employment."

Edward Balls: Will the hon. Gentleman give way?

George Osborne: I am delighted to give way to the architect of tax credits, as I have just read out a quote from Citizens Advice.

Edward Balls: Tax credits have helped to reduce child poverty by a million since 1997, and the Government are committed to the goal of halving child poverty by the end of the decade. Does the Conservative party share that goal?

George Osborne: I am absolutely delighted that the hon. Gentleman intervened; I suspected that he might be in the Chamber today. In his constituency, 4,100 of his constituents received the wrong award, which was 41 per cent. of the people who applied. In his constituency alone, £2.9 million was overpaid to people he represents. If he is happy with that record, so be it; I do not think he should be. On child poverty, I know that he likes to do his homework so perhaps he should read the report from the Institute for Fiscal Studies, "Poverty and Inequality in Britain: 2005", produced earlier this year, which states that owing to the administrative problems with the new tax credits there was an increase in child poverty by 90,000 after housing costs and 80,000 before housing costs. I am not sure whether the hon. Gentleman has read that document, but I suggest that he does so before he intervenes again.

Edward Balls: rose—

George Osborne: Oh, the hon. Gentleman has already read it.

Edward Balls: I am grateful to the hon. Gentleman for giving way again. I shall rephrase my question. Child poverty rose by 4 million between 1979 and 1997. As a result of the working families tax credit and the introduction of child tax credit, child poverty has now fallen by a million since 1997 and, because of tax credits, is forecast to fall further. The Government are committed to halving child poverty by the end of the decade and to abolishing it in a generation. Is the Conservative party committed, like the Government, to the abolition of child poverty and to halving child poverty by the end of the decade? It is a simple question: yes or no?

George Osborne: We are committed to policies that reduce child poverty. We are not committed to policies that have increased child poverty. As the IFS said, the introduction of the new tax credits has led to an increase in child poverty by about 90,000 after housing costs and 80,000 before housing costs. The hon. Gentleman says that the system has helped all those families, but he has obviously not read the reports that we are debating today—for example, the CAB report, which states that the tax credit system has plunged many below the breadline and into mounting debt; or the parliamentary ombudsman's report, which talks of families having to borrow money from family and friends to support their children, using up their life savings or running up credit card debts to pay for child care costs, buy food and get to work.

Edward Balls: rose—

Edward Miliband: rose—

George Osborne: I will happily give way to the other Ed, the other architect of the tax credit policy. Is the hon. Gentleman proud of a system that has plunged many below the breadline?

Edward Miliband: I am grateful to the hon. Gentleman for giving way. We are asking for simple intellectual honesty from him. Under the tax credit system, child poverty has fallen by about a million. Does he acknowledge that, and does he acknowledge the responsibility of tax credits in cutting child poverty? It is a simple question—yes or no?

George Osborne: No, I do not acknowledge that the present tax credit system has helped in the reduction of child poverty, because I have in front of me the IFS report, which states that the administrative problems with the new tax credits led to an increase in child poverty by 90,000. That is in the document.

Edward Miliband: rose—

George Osborne: Unless the hon. Gentleman has read the document—[Interruption.] He has? Then I will give way.

Edward Miliband: The hon. Gentleman says that the present system of tax credits has not helped to tackle child poverty, but One Parent Families said in its Budget submission in 2005:
	"Tax Credits have delivered substantial improvements in the levels of income delivered to lone parents, and evidence suggests that they will have helped achieve the impressive expected reduction of child poverty by a quarter by 2004/05."
	That organisation is saying that we have helped to tackle child poverty through tax credits.

George Osborne: The hon. Gentleman obviously has not read the words of the Child Poverty Action Group—if he wants to trade organisations—which says that the way that the tax credit system operates has created, rather than prevented, hardship. I know that the hon. Members for Doncaster, North (Edward Miliband) and for Normanton (Ed Balls) are fiercely keen to defend their reputation and that, to an extent, their reputation depends on the success of tax credit policy—we will see how that fares over the next couple of years—but they should own up to the mistakes. The very fact that they do not own up to them shows how out of touch many Labour Ministers and those who advise them have become with the problems that their tax credit system has created. The person who is more disconnected from that reality than anyone else is the Chancellor of the Exchequer himself: the man who has put tax credits at the heart of his empire.
	We understand that the Chancellor is in Brussels today, but he must be as disappointed as we are that he has missed yet another chance to defend his policy to the House, for he invented tax credits—no one else. He made them complicated and intrusive—no one else. He presided over his own Department's errors and incompetence—no one else. Yet when it comes to admitting his mistakes, it is anyone else but the Chancellor. When it comes to explaining how the Government are sorting our his fiasco, it is anyone else but the Chancellor. Above all, when it comes to apologising to the thousands of families who are suffering hardship as result of his chaotic administration of tax credits, it is anyone else but the Chancellor.

Rob Marris: The hon. Gentleman mentioned figures of 50,000 or 150,000 complaints. My understanding of tax credits is that they have helped—or changed the income of, to put it in more neutral terms for his purposes—6 million families. With a back-of-an-envelope calculation, that suggests an administrative problem of about 3 per cent. on his figures. The Government admit in their amendment to the Opposition motion that there are administrative problems. All hon. Members admit that there are administrative problems. First, will he say what percentage of administrative problems he thinks is acceptable for any Department? Secondly, to change the focus, will he say whether he supports tax credits, because he is arguing that they are putting families into poverty, yet his own motion does not pursue the logic of that and suggest that they should be abolished?

Mr. Speaker: Order. Shorter interventions would be helpful.

George Osborne: Thank you, Mr. Speaker. Perhaps the hon. Gentleman will catch your eye later, so that he can explain that the error rate is not 3 per cent. He should consider his own constituency. Of the 8,200 tax credit awards there, 1,100 were unpaid and 2,600 were overpaid. That is very considerably more than 3 per cent. Indeed, in total the overpaid and underpaid awards come to almost half the entire tax credit awards in the country. We are not talking about small amounts of administrative error.
	We have finally managed to bring Browne to the Dispatch Box, but with respect to the Chief Secretary, we have got the wrong Mr. Browne. The Prime Minister has said sorry and the Paymaster General has said sorry, but we have not heard a word from the architect of tax credits himself. Indeed, the last time that the Chancellor answered any questions on tax credits in Parliament was more than a year ago, and he has had plenty of opportunities to do so.

Ian Austin: rose—

George Osborne: Perhaps the hon. Gentleman will apologise on behalf of the Chancellor.

Ian Austin: I should like to ask the hon. Gentleman three simple questions. Does he accept that child poverty trebled when the Conservative party was in power? Does he accept that it has been cut by 1 million under this Government? Will he tell us—with a straight answer, yes or no—whether he supports the Government's objective of halving child poverty by the end of the decade?

George Osborne: The hon. Gentleman has obviously not listened to the earlier exchanges. Of course any party that believes in a civilised and compassionate society wants to reduce child poverty. The point of the debate is that many tens of thousands of families have been plunged into child poverty as a result of the tax credit system fiasco. If he has not yet become aware of that in the couple of months that he has been a Member of Parliament, I suggest that he hold more constituency surgeries and he will discover what is going on in his constituency.

Patrick McLoughlin: Will my hon. Friend tell us later how much the implementation of the tax credit system has cost the country? Bearing in mind that it is fundamental to a lot of people, how much will all the complaints and the wrong awards cost the nation? How much of the money that we want to go to people who need it is thus not arriving there?

George Osborne: My right hon. Friend does not have to wait for the rest of my speech because I am happy to tell him now that the cost of the administration of tax credits has increased tenfold to more than £400 million. More than 3,000 people are now employed just on the helpline. We are all, as taxpayers, paying for the mess that the Chancellor has created.
	How did we get into this mess? We all know that the introduction of tax credits in 2003 was shambolic. No one who was an MP at the time is likely to forget that. Hundreds of thousands of families were left without the financial support on which they relied. At the height of the crisis, there were 1.7 million attempts in a single day to contact the Revenue helpline—[Interruption.] The hon. Member for Normanton is muttering. I suspect that he had a special phone line in the Treasury when he was working there, but none of the 1.7 million people who were trying to contact the Revenue got hold of his number—perhaps they would have shouted all sorts of abuse at him if they had.
	It took four months before the system was stabilised. Thanks to the work of the Public Accounts Committee, we now know that the testing period for the new information technology system was cut significantly before it went live. We do not know who ordered it to be cut, so perhaps the Chief Secretary to the Treasury can tell us today. We also still have not seen the Government's gateway review, which said that the IT system was going to work well, so will the Chief Secretary publish that without further excuse?
	Since the initial fiasco, we have had one software problem after another. Some 500,000 families received duplicate payments and 82,000 households had to find the cash to repay the Revenue for its own mistakes. In the past financial year, 60,000 people who told the Revenue that their income had changed found that their partners' income was reduced to zero as a result. They were then overpaid tax credits that were clawed back from them. The Revenue might think that the mistakes have been rectified, but families are still living with their consequences, as the reports that we are examining today make clear.
	One mother facing an overpayment of £5,000 told the ombudsman:
	"we are in the process of remortgaging our house to cover payments for credit card and loan repayments. My husband and I are at breaking point due to the pressure and stress."
	I am sure that the hon. Member for Chorley (Mr. Hoyle) has heard similar examples in his constituency surgery.

Lindsay Hoyle: The hon. Gentleman is generous in giving way. Of course we have heard about mistakes and many complaints have been made. Any MP who holds surgeries will know the number of people who come to them with problems, but allowing for that, everyone in the Chamber will recognise that child poverty must be something that we put into history. Will the hon. Gentleman make it clear whether the Conservatives would, if elected, scrap tax credits? His answer to that question would address a lot of the issues today.

George Osborne: With the greatest respect to the hon. Gentleman, I shall get to the future of the tax credit system later in my speech, so I shall happily take an intervention then. Again he talks about isolated cases, but of the more than 11,000 people in his constituency who receive tax credits, half were made an incorrect award. He cannot seriously be happy with that as the Member for Chorley.

Lindsay Hoyle: Never once have I stated that I am happy when judgments are wrong—far from it. I am the first to complain to the Minister and to take up issues on behalf of my constituents. I hope that other hon. Members also do that. We do not need any lectures from the hon. Gentleman.

George Osborne: I was not giving the hon. Gentleman a lecture, but merely filling him in with the details about his constituency.
	The Paymaster General gives the impression that the difficulties are teething problems that are on their way to being resolved. However, as we all know from our surgeries—this is probably as true in Chorley as it is in Tatton—the problems continue. We know of families who found that eligible children were simply deleted altogether from a tax credit award. We know of people whose repeated attempts to inform the Revenue of overpayments have been ignored. We know of mothers whose Sure Start maternity grants have been refused because the system said that they were not in receipt of child tax credit, although in fact they were. We know of people who have received multiple award notices on the   same day, each saying something completely contradictory.
	When people try to get in touch with the Revenue to ask for help, what do they find? In the words of the ombudsman, their experience is a "very dismal one". People phone, write, complain and appeal, but they still fail to get a satisfactory response for months, despite the fact that, as I pointed out to my right hon. Friend the Member for West Derbyshire (Mr. McLoughlin), more than 3,200 people now work on the helpline and more than 400 people are dealing with complaints. That is the system today, not during the crisis of the initial launch or the computer errors that affected hundreds of thousands, but now, two years after the tax credits system was launched. It is all documented in the damning independent reports of the parliamentary ombudsman and Citizens Advice.

Ian Austin: Will the hon. Gentleman give way?

George Osborne: I gave way to the hon. Member for Chorley (Mr. Hoyle) and I now want to make progress.
	How could the Paymaster General have possibly told Parliament:
	"The system has been stable and performing very well . . . for well over a year"?—[Official Report, 7 February 2005; Vol. 430, c. 1254W.]
	The parliamentary ombudsman certainly found it puzzling. She says in her report:
	"the cases I have investigated lead me to the conclusion that such reassurances"
	by the Paymaster General
	"did not give a complete picture of what has been happening".
	That is a devastating and, as far as I am aware, an unprecedented rebuke of a Minister by Parliament's watchdog. Why did the Paymaster General say that the system has been performing very well? Did she not see what every other MP sees in their surgeries, or did she choose not to tell Parliament the whole story? I hope that she gives a full account of herself today.
	What hundreds of thousands of low-income families want to know is not how the Government got into the mess but how they are going to get out of it. That is the second issue. The Paymaster General told us on 26 May this year that she was taking steps to sort out some of the ongoing problems. It was at least a recognition that we were no longer dealing with teething problems. I welcome those proposals—for example, making the award notices more intelligible and improving the helpline service—but frankly the reforms go neither far nor fast enough.
	Citizens Advice agrees with that, as the Paymaster General knows. It explains that even the modest proposed changes could take up to 18 months to implement. That is 18 months of poor information, more bad advice and more inadequate support. It is not acceptable. The Chief Secretary should confirm—I assume by his presence that he is now in charge of tax credit policy—that the Government are going to implement in full the 12 specific recommendations in the parliamentary ombudsman's report. They go much further than the changes announced by the Government and include clearer information about overpayments and additional tax credits, training for staff to recognise cases of hardship, and automatic payment of additional tax credits to overpaid families in receipt of income support.
	Will the Chief Secretary also immediately suspend plans to move a further 800,000 of the lowest income families who currently receive their tax credits from Jobcentre Plus to the Treasury's chaotic systems until the problems are resolved? No one else should be subjected to yet more misery and hardship at the hands of this Treasury.
	There is a specific recommendation on the recovery of overpayments that is particularly important. The ombudsman says that she does not consider that
	"the present internal system for determining whether sums should be repaid operates in a fair and transparent manner."
	That is why she suggests introducing a statutory test for the recovery of overpayments and a right of appeal to an independent tribunal—in other words, a test that puts the onus on the Revenue to get the awards right in the first place and that is consistent with that which has long been applied to social security benefits, which everyone but the Chancellor of the Exchequer knows are the same as tax credits.
	I agree with the ombudsman on that statutory test. It is why it is part of the motion. So does the right hon. Member for Birkenhead (Mr. Field) who, with other Labour MPs, has tabled an early-day motion on the subject. Will the Chief Secretary confirm that the Government will introduce that statutory test and whether he is going toimplement the other recommendations in the ombudsman's report?
	That brings us to the third issue. In the absence of a statutory test, what is the Government's position on reclaiming overpayments? We have finally discovered that, in the first year of operation, the Revenue overpaid an astonishing £1.9 billion to 1.9 million people. When my hon. Friend the Member for North Thanet (Mr. Gale) asked the Prime Minister about overpayments, he said:
	"the Paymaster General has said already that we will not seek to get the money back if the error is on the part of the Inland Revenue."—[Official Report, 22 June 2005; Vol. 435, c. 798.]
	That is what the Prime Minister said at the Dispatch Box. In case people think that it might have been a mistake, he repeated it a week later at Prime Minister's questions. That is not consistent with what the Paymaster General is telling us. She says that overpayments caused by errors by the Inland Revenue will only be written off if the claimant could not possibly have spotted the error themselves. Indeed, we are now told—perhaps the Chief Secretary can confirm this—that 98 per cent. of overpaid tax credits have been automatically reclaimed. Is that correct? If it is, it is very different from what the Prime Minister promised people from the Government Dispatch Box.

David Laws: It might help the hon. Gentleman if I say that I received a letter from the Prime Minister only yesterday confirming that, although the policy is to write off overpayments where there is an official error, he would like to clarify that this is only where the claimant should have reasonable cause for thinking that they were paid the right amount. In other words, it is not a change of policy but exactly as it was before.

George Osborne: There we go. Perhaps the Prime Minister will be seeking an early opportunity to make that clear to the House. It seems like another battle between No.10 and No.11 that No.10 lost.

Rob Marris: The hon. Gentleman has misquoted my right hon. Friend the Prime Minister.

George Osborne: I did not misquote the Prime Minister. If the hon. Gentleman turns to column 798 on 27 June, he can read the Prime Minister's words, which I repeated in full. Perhaps the hon. Gentleman will join me in calling on the Prime Minister to explain why he misinformed the House not only on one occasion, but twice.

Julian Lewis: Can my hon. Friend throw any light on why so many mistakes have been made by the Inland Revenue? Is there a common theme to this litany of error and what steps, if any, have the Government been taking to ensure a higher level of competence?

George Osborne: My hon. Friend, with great prescience, brings me to the last section of my speech. He asks whether there is a common theme. There is a common theme in a number of different ways. For example, there is a common theme with the computer projects that the Government have introduced throughout Whitehall. There is a common theme with the various pet projects that the Chancellor has dipped his fingers into, such as individual learning accounts, stakeholder pensions or pension credit. One of my favourites—it is little known—is the link-up between Cambridge university and the Massachusetts Institute of Technology that the National Audit Office had to crawl all over. I can see that this is all bringing back happy memories for the hon. Member for Normanton.

Frank Field: The hon. Gentleman says that he is coming towards the end of his speech. I hope that before he resumes his place he will answer one question that poses in a different form questions that have already been asked. No one can say that my right hon. Friend the Chancellor of the Exchequer is not keen to redistribute income. Taxpayers have given up a 5p reduction in the standard rate of tax to finance tax credits. If the hon. Gentleman were Chancellor, would he use the money in exactly the same way or in a different way?

George Osborne: That is an entirely fair question and it is literally a matter to which I am turning. Perhaps the right hon. Gentleman, who has a bit more patience than some of his right hon. and hon. Friends, will listen for a second. As he knows, there is a growing body of opinion that says that we need a far-reaching review of the tax credits system. In her review, the ombudsman says that it is rightly a task for Parliament and the Government—not for her—to address the
	"fundamental question as to whether, for people on modest incomes who have to budget and plan their finances carefully to manage their lives, the inbuilt instability or uncertainty really works."
	The chairman of the Inland Revenue, the man charged with administering tax credit, thinks that we need a review. In the Financial Times last week he said:
	"if there are real problems in discharging the policy"—
	on tax credits—
	" . . . then you'll have to debate what the right policy is."
	We know that the Prime Minister would probably support a review. It is an open secret that he has never liked the Chancellor's tax credits. If we read the Westminster Hall debates that have been held on this subject, it is clear that a growing number of Labour Members have called for a review. Even the hon. Member for North Durham (Mr. Jones), who, I understand, is one of the Chancellor's henchmen, has called for a fundamental, root-and-branch review. All those Members are right. We need that fundamental root-and-branch review. We need to ask whether the current system of annual payments can ever meet the needs of people whose income and circumstances can change week by week. We need to ask whether people on low incomes will ever have the flexibility in their budgets to repay the overpayments that are an inherent part of the current tax credit system.
	We need to ask whether we should consider moving to a system where payments are fixed for longer and require fewer changes. That is something to which I am attracted, but it is something that should be reviewed before we come to a definite conclusion. We need to ask whether it is right that hard-working families on average incomes are paying taxes to fund means-tested benefits for people earning £66,000 a year. That is something that a review should consider.
	Tax credits were designed to tackle child poverty, but as I have said repeatedly, the Institute for Fiscal Studies has shown that their administration has plunged people and their children into poverty. There could hardly be a greater indictment of the Chancellor's policy. Families have been pushed below the poverty line by Government incompetence. Single parents have been forced to rely on Salvation Army food parcels to feed their children. Tens of thousands of people have been driven to despair and hardship.

Edward Balls: rose—

George Osborne: With the greatest respect, I am about to finish my speech.
	Is that really what we want from a 21st-century welfare system? Is it not time that that the Chancellor and his minions took a long hard look at his cherished tax credits? Is it not time that he had the courage to take the rap for his own mistakes?

Des Browne: I beg to move, leave out from "House" to end and add
	"supports the Government's strategy to make work pay and provide financial support to families through tax credits; welcomes the fact that over 6 million families and 10.5 million children are benefiting from tax credits, with first year take-up of around 80 per cent., compared to just 57 per cent. for the Family Credit system inherited by the Government; recognises that far more families than ever before are benefiting from help with childcare costs; notes that tax credits are central to the Government's goal of abolishing child poverty; further notes that tax credits have helped ensure there are 1.5 million fewer children in poverty and have helped 275,000 lone parents into work; recognises the need to balance the demands for a simple system with the need for a system that responds to people's changing circumstances, giving most help to families when they need it most; acknowledges the IT and administrative problems that accompanied the early stages of implementation; and welcomes the measures announced by the Government for improving the administration of the system."
	May I echo the entirely appropriate words of the hon. Member for Tatton (Mr. Osborne) about the sad events and consequences of the terrorist attack in this great city last week? We have all been moved and impressed by the dignity and resilience of the people who were tragically affected by those events. Our thoughts continue to be with them, and I am grateful to the shadow Chancellor for his words as, I am sure, are all hon. Members.
	The shadow Chancellor made two allegations about my right hon. Friends misleading the House, whether inadvertently or otherwise. The accusation that my right hon. Friend the Paymaster General misled the House about the stability of the IT system is incorrect. I accept that the shadow Chancellor relied on the ombudsman's report for his assertion, and that he was reporting it to the House. My right hon. Friend, however, did not mislead the House. There has not been a failure of the tax credit computer system since tax credits were introduced in April 2003. The Paymaster General made a statement about the performance of the IT system, its speed and reliability over the previous year. I am happy to confirm that the system has been performing well in terms of speed and availability for that period. There were, of course, well-publicised problems—we will come on to deal with some of them—in the early days when the system did not perform as expected. With a system of this size and complexity, there are occasional glitches, but I am happy to refute the assertion that my right hon. Friend the Paymaster General misled the House.
	As for the assertion that my right hon. Friend the Prime Minister misled the House by saying that overpayments due to error would be written off, that is not the case. Both the Prime Minister and the Chancellor reported accurately the policy that Her Majesty's Revenue and Customs write off overpayments where there is official error. There is, however, a long-standing principle that official error requires both a mistake on the part of the Revenue and reasonable belief on the part of the claimant that they were being paid the right amount. Neither the Prime Minister nor the Chancellor were doing anything other than reporting the long-standing principle.

David Laws: Does the Chief Secretary expect us to take that response seriously? When the Prime Minister was asked in the House whether there would be an amnesty in each and every case where the Treasury was responsible for an overpayment, he said that
	"we will not seek to get the money back if the error is on the part of the Inland Revenue."—[Official Report, 22 June 2005; Vol. 435, c. 798.]
	What does the Chief Secretary think people in the country would have understood by that?

Des Browne: I am grateful to the hon. Gentleman for giving me the opportunity to restate the position. Of course, that was an expression that there would be a write-off if there was official error. He knows—

George Osborne: An error by an official.

Des Browne: Well, an error by an official. I do not want to be pedantic. The hon. Gentleman reads the quote to me and it contains the phrase, "an error by an official". As I understand it, that is otherwise official error, is it not? I think I am right.
	Official error has a long-standing definition, which includes a mistake on the part of the Revenue and the claimant reasonably thinking they were being paid the right amount. The qualification is necessary to strike the   right balance between fairness to claimants and fairness to taxpayers as a whole. I shall come later to the question of the extent to which the overpayments could or could not have been known to individuals, but it could not possibly be the case that it would not matter to what extent a claimant knew that the error had been made.

Stephen Dorrell: The Chief Secretary's defence of the Prime Minister is based on the proposition that there is a long-standing definition of the concept of official error, which includes the implied terms to which the Chief Secretary refers. If the definition is so long-standing, can the right hon. Gentleman point to any previous example of a Government claiming that in their defence?

Des Browne: I am not in a position to do that, but I suspect that, in the context of decisions as to whether or not errors are official errors, these tests are regularly applied. I shall research the matter and if I am in a position to do so, I shall write to the right hon. Gentleman.

Stephen Dorrell: I am grateful to the Chief Secretary for at least being straight with the House. I give notice that I shall table a question to the right hon. Gentleman and give him the opportunity to set before the House the precedents that he is claiming.

Des Browne: I am grateful to the right hon. Gentleman for that opportunity, but I have already said that I would do that.

David Laws: I wish to clarify the fact that the words "official error" were not part of the Prime Minister's response. He said that
	"we will not seek to get the money back if the error is on the part of the Inland Revenue."—[Official Report, 22 June 2005; Vol. 435, c. 798.]
	How does the Chief Secretary explain the statement that the Chancellor of the Exchequer made on 23 June to GMTV, when he said:
	"Where there's been a mistake by the Inland Revenue and where we are to blame as a Government then we will not take the overpayment"?
	There is nothing in that about official error at all.

Des Browne: I rest my case on the position as I have explained it to the House. I have made my position clear and I shall follow up with the further research that I have undertaken to conduct. In my remarks to the House this afternoon, I intend to answer each of the points made by the hon. Member for Tatton, the shadow Chancellor, but—

Rob Marris: Perhaps the situation is different in Scotland, but when I practised as a solicitor in England, there was the concept of mistake of law and mistake of fact. If someone was overpaid by some body, part of the test that the court would apply was whether they could reasonably have realised that that overpayment was an overpayment. That has been an inherent part of the English legal system for decades.

Des Browne: I am grateful to my hon. Friend for his contribution to this part of the discussion. I do not think other hon. Members would thank me for continuing it. I have made my position clear. I ought to be able to provide the information that the right hon. Member for Charnwood (Mr. Dorrell) seeks. I will try to do that, to support it. Having practised law in Scotland, I am very familiar with the sort of principles to which my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) refers.

Geoffrey Clifton-Brown: Will the Chief Secretary give way?

Des Browne: No, I think I have said enough on the matter. I intend to make some progress with my speech.
	As I said, I intend to answer each of the points made by the hon. Member for Tatton, but I find it extraordinary that in the speech that we have just heard, there was barely any mention of the benefits that the Government's system of tax credits is bringing to millions of hard-working families right across Britain. Even when the shadow Chancellor was given the opportunity to comment on what is now accepted in relation to child poverty, he could not bring himself to concede that that progress had been made.
	Six million families now benefit from tax credits. As a result, 10.5 million of the nation's 13 million children now receive more generous support—that is 10,000 families on average in each of my right hon. and hon. Friends' constituencies; indeed, in each right hon. and hon. Member's constituency. The shadow Chancellor is no doubt armed with figures from my constituency, as from everybody else's, about the number of overpayments or underpayments that may have been made, but the fact is that on average, across the United Kingdom, 10,000 families in each of our constituencies are benefiting from this policy.
	In the first year of the new system, take-up of tax credits was around 80 per cent., compared with just 57 per cent. for the family credit system that we inherited when we came to power in 1997.

Geoffrey Clifton-Brown: As my hon. Friend the Member for Tatton (Mr. Osborne) pointed out, in many constituencies up to half of all claims are calculated wrongly and underpaid or overpaid. Does the Chief Secretary think that that level of error is acceptable and, if not, what level of error does he think acceptable?

Des Browne: The hon. Gentleman anticipates part of the speech that I wish to make. I do not accept that all those calculations are in error, and it should become clear to him, as I develop my remarks, why that is. On a pedantic point, the figure of 50 per cent. as regards the calculations involving overpayment and underpayment is not entirely correct—although it is not far short of correct.
	As a result of the Government's strategy to make work pay and to provide financial support for families through tax credits, there are now 1.5 million fewer children in poverty, and 275,000 lone parents have been helped into work. Reforms since 1997 mean that by October this year families with children will, on average, be better off to the tune of £1,400 a year in real terms; and those in the poorest fifth of the population will be, on average, £3,200 a year better off. While it is right that we should debate the effectiveness of the administration of the system—I shall come to the specific points made by the shadow Chancellor in due course—the extent to which hard-working families have benefited from credits and the contribution that credits have made to tackling poverty is the proper context in which today's debate should be seen.
	Before I deal with administration, I want to remind the House why we introduced the tax credits system and what it replaced. The family credit system that we inherited had several problems, as identified in the 1998 report on work incentives by Martin Taylor. In particular, four areas gave us considerable concern: first, it acted as a disincentive to finding work; secondly, it was an insufficiently generous award; thirdly, it was fundamentally inflexible and unable to take into account changes in circumstances; and fourthly, it gave too little assistance with the costs of child care provision.
	I might point out that the Liberal Democrats accepted that analysis at the time, and it was further supported by their then spokesman, the hon. Member for Northavon (Steve Webb).

David Laws: I presume that the right hon. Gentleman is going to describe the whole series of amendments that my hon. Friend the Member for Northavon (Mr. Webb) tabled, including on having a statutory test and dealing with the problem of overpayments.

Des Browne: I have no such intention, because most of those amendments were withdrawn after debate and explanation of the way in which the system would work, and after the hon. Member for Northavon had expressed satisfaction with those explanations.
	At some stage, it might be useful to hear from the Liberal Democrats why they changed their minds on the analysis of the support that working families need, as reflected in their recent manifesto. It will be interesting to hear the reason for that change of heart.
	We introduced the working families tax credit six years ago to deal with some of the issues that the Taylor report—and, indeed, the Liberal Democrats—raised. That was the start of the necessary process of reform. We tried to ensure that work paid more than being on benefits, that take-up increased and that we gave proper support for child care costs. Today, the child tax credit and the working tax credit continue that approach and deliver the desired outcomes more effectively.
	The credits also offer the chance of paying the child tax credit directly to the main carer, mainly the mother. For the first time, tax credits can be adjusted to reflect changes in the number of children in the family, working hours, child care costs or family income. That means that we can provide the greatest support to families who need it most when they need it most.
	We need to acknowledge the value of tax credits and the help that they provide in people's everyday lives. Today's system replaces an inflexible and unfair approach that did little to incentivise people into work and little, if anything, to lift children out of poverty.
	Despite the criticisms, support for the approach came not only from the Liberal Democrats but from the recent Citizens Advice report. Part of our disadvantage as Members of Parliament is that when we refer to such substantial documents, we cannot all read them, and they are capable of supporting different views. The first paragraph of the Citizens Advice report states:
	"We firmly support tax credits as a vehicle for directing substantial extra money towards lower income families."
	The Government share the organisation's ambition for the system to work effectively for all who are entitled to extra help.
	Let me read part of the foreword to the health service ombudsman's report, to which the shadow Chancellor referred so freely. The third sentence of the foreword states:
	"This report does not suggest that the new tax credit system is in general disarray; on the contrary it recognises that, given the scale of the undertaking, its introduction has been broadly successful".
	Hon. Members might be surprised that that was the ombudsman's view, given the shadow Chancellor's deployment of selective quotations from her report.

David Laws: I would not want the Chief Secretary to mislead anyone about what Citizens Advice has said. I presume that he has seen its latest briefing note to hon. Members, which states that it is misleading to claim that Citizens Advice was strongly in favour of moving to a more responsive system of tax credits and that it was concerned that overpayments would be made under the new system. Does the Chief Secretary agree?

Des Browne: I have not seen the document to which the hon. Gentleman refers.

David Laws: It was circulated.

Des Browne: It was not circulated to me. I do not know whether that was deliberate or an error.

Mr. Speaker: Order. I am reluctant to interrupt the proceedings. However, although I appreciate that, so far, the word "misleading" has been used for documents, I ask hon. Members to be careful about using the term when it relates to an hon. Member. I am just firing a warning shot at this stage.

Des Browne: Thank you very much, Mr. Speaker.
	The hon. Member for Yeovil (Mr. Laws) asked me whether I agreed that the quotation that he read out from a document from Citizens Advice that I have not seen was correct. I have no way of knowing, but I trust him, and I do not think that he would read it incorrectly. So I accept that he has read it correctly, if that is the answer that he is seeking from me. He has achieved what he was seeking to achieve.

Edward Balls: Does my right hon. Friend agree that, far from misleading the House, the shadow Chancellor made very clear his unwillingness to commit the Conservatives either to halving child poverty by the end of the decade or to continuing with the tax credit system in order to achieve that? Will my right hon. Friend confirm that the Government remain committed to halving child poverty by the end of the decade and to maintaining the tax credit system as the best way to achieve that?

Des Browne: I have no difficulty in agreeing with my hon. Friend on that. As he knows, that is the mainstay of our social policy. I shall explain in a moment why it is significant that the shadow Chancellor is unprepared to commit himself or his party to that objective, which might help us to understand why he is so critical of the system.
	The House will be pleased to know that my right hon. Friend the Paymaster General has recently had meetings with the authors of the reports that I have just quoted, namely, the office of the ombudsman and Citizens Advice. She has also had a meeting with the adjudicator who also prepared a report. They all reiterated their support for our policy of supporting working families and children through the tax credit system.
	In an economy in which people move between jobs more often, and in which their circumstances change more quickly, our challenge is to adjust child tax credits to respond to changing income patterns as quickly as possible. I should like to put that challenge into context. Three million people shift jobs each year in the United Kingdom labour market, and their income changes are often substantial. In addition, some 700,000 children are born each year, each of whom receives a rate of tax credit in accordance with their individual family circumstances. This fast-moving environment requires a balance between flexibility and certainty, while avoiding undue complexity and information overload.
	That is why one of the decisions that we took at the outset—after consultation, I might say—was to set a disregard for increased income up to £2,500. Claimants do not have to tell Her Majesty's Revenue and Customs if their income rises in one year by less than £2,500 and, importantly, if their award is not affected by such a change. This allows a cushion, provides incentives and spares people who see some changes in income unnecessary paperwork. It has been suggested—I think that the hon. Member for Yeovil has encouraged the suggestion—that the disregard represents a written off overpayment. That is a bit like describing the personal tax allowance as a failure to collect income tax. It is simply not the case.
	Our families need flexible support such as this to help with the demands of the modern globalised labour market. Tax credits have made a real contribution to halving child poverty by 2010, and to the successful performance of our labour markets, which are the envy of the world. Because of this contribution, those who criticise tax credits need to make clear whether they actually support the stated policy. They must make a choice between a less responsive system that cannot respond to changes in income—which admittedly would be easier to run—or the current approach, which can respond but generates greater complexity.
	We still do not know whether the Opposition are supportive of working through those challenges, or whether they share our aim to lift more children— indeed, all children—out of poverty through the use of tax credits, among other things. We do not know whether they will continue to refuse to face up to the difficult decisions required to achieve that aim, or whether that is their aim at all. It is really quite simple. If they believe that the idea of tax credits is wrong, they should say so. We could then debate the positive and negative impacts of that policy along appropriate lines. If they think that tax credits are right, our purpose today should be to work constructively to improve their administration, not to undermine a programme that has benefited many people, and particularly many children.

John Bercow: Much of the debate so far has focused on the incidence and consequences of overpayments. We should not, however, neglect the issue of underpayments. Given that in the hundreds of thousands of such cases there has necessarily been an increase in hardship and indebtedness, will the Chief Secretary confirm that in each and every case, when people get their due, the payment of commercial interest on top will be included as a minimum and, better still, the payment of a substantial sum in compensation for distress and anxiety caused?

Des Browne: I cannot give the hon. Gentleman that undertaking, although I accept entirely why he should ask for it and think that that payment should be made to those who have been underpaid. Underpayments are much rarer than overpayments, however. People are much more likely to report changes in circumstances that they think will result in an increase in their tax credit than it appears that they are to do the opposite. That is why the retrospective balancing needs to be done at the end of the year. My information is that the system reacts quickly to such claims of changes in income circumstances, and that there is no necessity for us to build into it a system of compensation when the Revenue already has a compensation mechanism that can be triggered as appropriate.

John Bercow: I shall have a second stab at a different aspect of the issue. The Chief Secretary had a spat earlier with my hon. Friend the shadow Chancellor and the hon. Member for Yeovil (Mr. Laws) on the issue of the responsibility of the claimant to know if he or she was being overpaid. Does he agree, as he is part of the architect team for the policy, that there is a difference between someone who, by computer error, finds that he is paid £20,000 for the year rather than £2,000, and someone who is paid perhaps a few hundred pounds more? Does not he accept that it is not the responsibility of the citizen to be able to work out the complex minutiae of what goes on in the Chancellor's mind?

Mr. Deputy Speaker: Order. Before the right hon. Gentleman answers, may I say to the hon. Member for Buckingham (John Bercow) that I live in hope that his stabs will become progressively shorter?

Des Browne: We would all be the less entertained were that the case, but that might be an objective that the hon. Gentleman would seek to achieve. The fact is that he makes an important point. I accept entirely that we ought to share an objective in terms of the administration of the system achieving his desired outcome. I will come in due course to the implementation of the proposals made by my right hon. Friend the Paymaster General on 26 May. There is a recognition that communication between the Tax Credit Office and the claimant is important, and we are taking steps to improve that. I accept that there are circumstances in which the onus ought to fall more on the Tax Credit Office than on the individual, but since the likelihood of underpayment more probably arises from a reduction in a person's income, that information is more likely to be known to the claimant than to the Tax Credit Office, and the onus ought to rest firmly on the claimant to report that change of circumstance. I am sure that he understands that this is not a straightforward matter, and that it is yet another one of the complexities that flexibility generates. We need to get to grips with those complexities if we are agreed—as I suspect that he might be—that flexibility in the system is important.

George Osborne: This is an opportune moment to ask the Chief Secretary about the statutory test, which we have called for, which is in the parliamentary ombudsman's report, and about which the right hon. Member for Birkenhead (Mr. Field) has tabled an early-day motion. Such a test would help to establish on what grounds money should be reclaimed when there has been an overpayment. Will he give us a clear answer now as to whether the Government will introduce a statutory test?

Des Browne: On the basis of our current advice, we have no intention of introducing a statutory test. If the hon. Gentleman will be patient, I shall deal with the question of appeals and how we handle overpayments in due course.
	As I was saying, the problem is that we simply do not know the Conservative party's true position. More people than ever before are receiving tax credits to help with the costs of bringing up their children, but the Conservatives cannot bring themselves to support that.
	The proportion of workless households with children had fallen from just over 16 per cent. in the spring of 1997 to a little over 13 per cent. by the autumn of 2004, and the lone parent employment rate rose from a little over 45 per cent. in 1997 to nearly 56 per cent. in 2004. Tax credits have played their role in helping parents move into work. There is clear evidence from respected independent commentators such as, ironically, the Institute for Fiscal Studies that our policies to make work pay have helped to boost the number of lone parents in work and, consequently, to lift a significant number of children out of poverty. How can anyone seriously seek to undermine a policy that contributes to such improvements?
	I do not and will not downplay the problems that administrative difficulties have caused many people with their overpayments. On behalf of the Government, the Prime Minister has tendered an apology which I am happy to repeat. I know that this has been a difficult time for some people. The Government are determined that the tax credit system will deliver what it is meant to achieve, because it plays such a significant role in our ambition to lift the children of this country out of poverty and to continue to allow our labour markets to work as they have, to the benefit of our economy.
	My right hon. Friend the Paymaster General acknowledged the challenges faced by the tax credit system in her statement to the House on 26 May—before, I should add, the publication of the reports that prompted the Opposition to table their motion. On that occasion, my right hon. Friend focused on six measures to improve the operation of the tax credit system.
	First, from April 2006 a much-improved awards notice will be issued, and we will review the information that we give claimants to help them to understand the system better. It is all very well for others to say that that will take time. Of course it will. We are dealing with millions of claimants and, potentially, millions of notices, and it is best to take the time and get the system right. Secondly, from this week we are running pilot schemes, contacting customers and encouraging them to report changes. That is relevant to what was said earlier about proactive engagement with claimants. Thirdly, we intend to improve the service from the helpline. We want to stop people from being passed from one department to another, and to ensure that they are given answers within a reasonable time. Fourthly, Her Majesty's Revenue and Customs will speed up its identification of IT system problems, which will mean quicker repairs. Fifthly, we will work more closely with the voluntary sector to give more active support to the most vulnerable claimants. Finally, we will spell out more clearly how we define hardship, and we are testing options for suspension of the recovery of disputed overpayments.

Stewart Hosie: In the case of one of my constituents, the payment award was correct but was withdrawn. Having contacted the helpline, my constituent was advised to contact the local Member of Parliament. I have heard of that practice anecdotally, and have been told of it by a constituent. Will the Chief Secretary confirm that that was the wrong advice, that the problem should have been resolved, and that the first point of resolution is not contacting the Member of Parliament?

Des Browne: I have no difficulty in agreeing that that was not the right advice. A helpline is there to help people, not to refer them to another source of help that, presumably, must then contact the helpline itself. I too am a constituency Member of Parliament.
	The distinct advantage in respect of tax credit cases is that calls are recorded. That is a very helpful tool in determining the credibility and reliability of people's recollection of such calls, but it is also a helpful training tool, in that it allows us to identify those working on the helpline who perhaps need further support and training. If the hon. Member for Dundee, East (Stewart Hosie)—or any other Members who are tempted to intervene to describe examples of such behaviour—bring to my attention, or to the attention of my right hon. Friend the Paymaster General, the detailed circumstances behind such anecdotes, we can examine whether a particular helpline helper or official is giving proper advice. If they are not, we can then assist them. However, I have no difficulty in agreeing with the hon. Gentleman that the advice that was given was not appropriate in the circumstance that he described.

George Osborne: I return to an issue about which I twice asked the Paymaster General at Treasury questions. According to the National Association of Citizens Advice Bureaux, some helpline staff and some tax credit staff have advised people to borrow money on credit cards to meet the overpayments. Does the Chief Secretary consider that good advice?

Des Browne: No, I do not, and such advice should not be given, but I say to the shadow Chancellor what I said to the hon. Member for Dundee, East—if he brings to my attention the detail of such calls—[Interruption.] With due respect to the shadow Chancellor, the fact that something is in the report means nothing; it does not mean that it happened or that it is anything more than an anecdote. If it did indeed happen, it should not have, but it would help if those who have information supporting such assertions were to make it available. We have the advantage that these calls are recorded, and that the official who dealt with a particular call can therefore be identified. As a result, we can look at the circumstances of the relevant part of the conversation, and determine the advice given and whether it was properly understood by the caller. I am not disputing that the report says what it says; I am simply pointing out that if we are given the details of a particular case, we can chase it up.

Stephen Dorrell: Will the right hon. Gentleman reflect on what he has just said? Surely he cannot be arguing that if the parliamentary ombudsman has examined a particular constituency case and quoted the evidence emerging from his inquiries, he, as a Minister, can ignore such evidence. That cannot be right.

Des Browne: I hear what the right hon. Gentleman is saying, and if that is what I said I accept entirely his admonition; I should reflect on it and I will do so. I should point out in my defence that in answering the shadow Chancellor's question, I did not understand him to be saying that this assertion emanated from the ombudsman's report. I do not recall it being in that report; that said, I do not pretend to recollect the report comprehensively. However, if the facts that instruct the right hon. Gentleman's admonition are correct, I accept it and I will deal with it.

David Laws: Will the Chief Secretary give way one last time?

Des Browne: Yes, but it will be the last time.

David Laws: I am grateful to the Chief Secretary. Before he winds up his opening speech, can he clarify whether the Treasury accepts the ombudsman's second, very important recommendation, which is that the Revenue should not seek to recover an overpayment until it has decided whether the excess amount should be recovered in accordance with the code of practice? Has a decision been reached on that point?

Des Browne: This issue formed part of the discussion between my right hon. Friend the Paymaster General and the authors of the report. I have no difficulty in agreeing with the hon. Gentleman that that proposal should be accepted, and it will be accepted.
	All of the proposals put before the House in my right hon. Friend the Paymaster General's statement of 26 May are in hand. I will say, however, that the system has been through only one full cycle. By that, I mean one cycle in which people applied for the credits, were assessed and received them and had their accounts adjusted to reflect current circumstances—in other words, only one cycle in which the flexibility of the system has been fully applied. The essence of the policy means that, across the system as a whole, there will necessarily be an element of overpayment and underpayment. As it is a system of retrospective adjustment, it shows the value of a flexible system.
	Let me reassure the House that two thirds of the total overpayment figure is due to rises in family income—rises that the House should welcome as further evidence of labour market improvements and employment opportunities today. Nearly £1 billion of the overpayment—around half—is due to increases in income of more than £10,000 a year. In many such cases, Her Majesty's Revenue and Customs were notified not during the year, but at the end of the year for the reconciliation process. Clearly, our next challenge is to ensure that claimants inform us during the year of any changes to their circumstances on that scale. So while this is not a perfect system and we do want to make it work better, it is neither broken nor in chaos, as some commentators and Opposition Members may have claimed.

Michael Jabez Foster: Is the Minister aware that people are frequently phoning the Department and being told to leave it until the end of the year? That is one of the problems. It is an administrative problem and I have considerable evidence of people being told not to supply their information, but to wait until the end of the year so that it can be sorted out then.

Des Browne: In some circumstances, that is appropriate advice, but only when the increase comes in underneath the £2,500 disregard; otherwise, it would not be appropriate advice. I say to my hon. Friend as I have said to other hon. Members that if he can bring the details of the individual calls to our attention, we will look into them and ensure that the training for the helpline takes such problems into account.

George Mudie: I wonder if I am alone in listening to this debate without knowing which of the ombudsman's 12 recommendations are not being accepted. The hon. Member for Yeovil (Mr. Laws) asked a specific question and the Minister said that he accepted that particular recommendation from the ombudsman, so will he tell us which of the recommendations are not being accepted?

Des Browne: We have already explained the position on complete write-off and, as I have already told the House, there is an ongoing discussion between the Paymaster General and the authors of the report. My right hon. Friend met Citizens Advice and the ombudsman separately on 5 July to discuss the recent reports. I have already referred to her statement of 26 May and said that the Revenue and Customs were taking matters forward. The Paymaster has agreed to provide a formal response to the ombudsman's recommendations and that will be issued in due course. I am not in a position to provide the House with that information today. However, the matter of complete write-off, which I understood the hon. Member for Yeovil to be raising, has already been explained.

David Laws: I am grateful to the Chief Secretary for giving way again, because I do not want to conduct debate on the basis of an undertaking that proves not to be accurate. Will he confirm again whether the Government have now accepted the ombudsman's second recommendation on page 8 of the report?

Des Browne: If the hon. Gentleman will allow me, all the ombudsman's recommendations are currently under discussion. In due course—[Interruption.] I thought that I had already indicated to the shadow Chancellor that I was not presently minded to concede the issue.

David Laws: Will the Chief Secretary give way?

Des Browne: I want to make some progress and take the opportunity to announce plans for providing child support through child tax credits for claimants on income support or jobseeker's allowance.
	On 22 June, my right hon. Friend the Paymaster General told the House that, following her statement of 21 October 2004, she continued to keep under review the planned migration to child tax credit of those families still receiving support for children through income support and jobseeker's allowance. Since then, she has considered very carefully the reports from the ombudsman and NACAB. She has also considered the views expressed by many hon. Members, for which we are grateful.
	I confirm that it remains the Government's firm intention to migrate all income-based support for children into a single, seamless stream of support, delivered through child tax credit. However, after consultation with my right hon. Friend the Secretary of State for Work and Pensions, my right hon. Friend the Paymaster General has decided that, subject to further review and consideration over coming months, the migration of the remaining families will begin during 2006. That will safeguard continuity of payment, and provide reassurance to that particular vulnerable group. Meanwhile, I again confirm that families will continue to receive the same level of financial support through their benefits as they would have received from child tax credit.
	As I have already told the House, nearly 10,000 families in each constituency now benefit from tax credits. Let no one have any doubt: tax credits have brought real progress in delivering key priorities for welfare reform. They direct more help to those who need it most, they respond to significant changes in circumstances and income, and they give fairer results. We acknowledge that there have been administrative problems, but the policy is the right approach, which is aimed at tackling poverty and unemployment and helping out hard-working families.
	Tax credits have made a real difference to people. That difference demands the respect of this House, and of Opposition Members.

David Laws: This important debate has so far not been very enlightening or useful. I hope that the Government's policy on tax credits will be a little clearer at the end of the debate than has been the case over the last 10 minutes. This debate is vital in holding the Government to account in respect of a policy area where there have been serious problems, and also because the administrative problems in the tax credit system have hit people on the lowest incomes in the country—the very people whom the Government's policies are intended to help.
	The hon. Member for Normanton (Ed Balls) has been a big contributor in this policy area and many others. Given the problems of the last couple of years, I can quite understand why he would prefer to concentrate on the big picture rather than on the smaller one. He is entitled to raise some of the matters that he has raised, and I shall touch on some of them at the end of my remarks.
	The hon. Gentleman and the Chancellor introduced tax credits to help people on low incomes, so they must be worried about the problems that have been created. The book by Robert Peston—in which I believe the hon. Gentleman played a part—contains a passage from an interview with the Chancellor on tax credits. The thrust of the Chancellor's remarks is very similar to what thehon. Gentleman said earlier. The right hon. Gentleman said:
	"I think tax credits have been misunderstood. People have focused on the mechanism, a bureaucratic issue, when it is in the end about citizenship, integrating tax and benefits. In the long term, these will come to be accepted as part of the economic and social framework of the country."
	The Chancellor and the hon. Gentleman may well be right, but meanwhile people suffering from the system's endemic problems of overpayment and underpayment turn up at advice centres in every hon. Member's constituency. If the hon. Gentleman intends to give that answer to those who come to see him, I assure him that he will receive pretty short shrift.
	Ministers have been aware of the problems for many months, at least, and have made several statements in an attempt to resolve them, and I acknowledge that the Chief Secretary helpfully accepted a lot of interventions. However, he was depressingly unclear about which recommendations in the ombudsman's report have been accepted and which have not. When the Paymaster General winds up, I hope she will give a clear answer to that. In her 22 June statement, she gave the impression that she accepted the ombudsman's report in total. However, when we look at the detail we find that what she actually said was that she accepted the administrative changes proposed by the ombudsman. She did not say that she accepted all the recommendations, and it is of course the non-administrative changes that are the most significant. I thought we were making progress when the Chief Secretary indicated about 10 minutes ago that the Government accepted the ombudsman's second recommendation. I am happy to take an intervention from the right hon. Gentleman if he wants to clarify that point. The recommendation is crucial and touches on whether the recovery mechanism for tax credit is lawful or whether it constitutes maladministration.
	The Chief Secretary clearly indicated that the Government would accept the ombudsman's second recommendation not to claw back overpayments until an assessment had been made, under the code of practice, of whether they should be clawed back. Now, under pressure, and with notes flying in various directions, the Chief Secretary has gone back on the commitment he made 10 minutes ago. I think all he was saying was that the Paymaster General visited the ombudsman recently and has indicated that she will publish a response to the ombudsman's report. The ombudsman has told me that she hopes to receive that response shortly. When the Paymaster General winds up the debate, will she confirm that that is the situation and, following the questions from Labour Back Benchers, may we have a clear statement about which of the ombudsman's recommendations have been accepted? The Government do not seem to have clearly accepted recommendations 2, 6, 10 and 11, yet they are the most important ones, so I hope the Paymaster General will make the situation clear.
	I want to focus on the administrative problems in the tax credit system first and then to make some more general comments in my conclusion. I began by expressing frustration that Ministers are taking so long to resolve the problem. There is frustration not just among Opposition Members, but among groups such as the citizens advice bureaux, which have a deep commitment to tackling child poverty and poverty in the working population. Before the debate, Citizens Advice published a briefing note, which is a good and powerful critique of the existing problems in the tax credit system. I am sorry that the Chief Secretary has not seen it. I shall certainly make sure that he does so after the debate. I shall read from the beginning of the document, which states:
	"To date  . . . we have not seen clear evidence"—
	from the Government—
	"of an action plan that will deliver the changes we believe are needed".
	Citizens Advice picks out three points, and if the Paymaster General can give us any enlightenment about those it would be most welcome. Citizens Advice states:
	"There has been no commitment to place an absolute limit on the amount that can be recovered from families who have been overpaid."
	We need clarification about that. Citizens Advice continues:
	"The position regarding writing off overpayments remains confused"—
	which has certainly been confirmed by the exchanges in our debate today—
	"as the onus remains on individual families to challenge the decision to recover, leaving unknown numbers of people repaying overpaid tax credits which may have resulted from Revenue errors."
	That was a problem that the ombudsman thought might mean that the recovery mechanisms were in breach of the law. She made it clear that at the very least she considered that it constituted maladministration, which alone is a serious enough assertion.
	The final point about which Citizens Advice was unhappy was this:
	"No commitment has been given to introduce a statutory right of appeal to an independent tribunal."
	I think we heard confirmation in the exchanges between the Chief Secretary and the shadow Chancellor that the Government would not accept that particular recommendation, but given the uncertainty over the ombudsman's other recommendations, I shall not be surprised if the Paymaster General tells us that she has not actually reached a settled decision on any of the issues and that she intends to publish a letter responding to the ombudsman's report at some unknown stage over the next few weeks. However, if we could have some clarification I should be grateful—[Interruption.] As the hon. Member for Buckingham (John Bercow) indicates, I am always willing to give way at any moment on such points.
	I said earlier that these issues are important to Members on both sides of the House and, in the debate in Westminster Hall on 7 June, we heard contributions not only from Opposition Members but from the hon. Members for Nottingham, North (Mr. Allen), for Stroud (Mr. Drew), for Selby (Mr. Grogan), for North Durham (Mr. Jones) and for South Derbyshire (Mr. Todd), all of whom were concerned about the impact on their constituents of the problems with the tax credit system. Several of them said that they wanted to see not only administrative changes but fundamental change to the tax credit system of the type that the shadow Chancellor mentioned at the end of his speech.

Geoffrey Clifton-Brown: The hon. Gentleman has done the House a service this afternoon by trying to seek clarification from the Government of whether they intend to claw back the overpayments, at least until the Government have decided in principle whether they will abide by the code of practice. The people involved are obviously of meagre financial means and we have all had difficult, harrowing constituency cases with people not knowing whether the overpayments will be clawed back by the Government. The Government owe those people a quick decision, and I hope that the Paymaster General will be able to give a clear and unequivocal statement on the matter when she winds up.

David Laws: I agree with those comments: it is high time that the Minister responded clearly to the ombudsman's report. After all, the contents of that report were no great surprise to anybody who had been closely involved in the tax credit system over the past year. Assuming that the Paymaster General has been taking a close interest in that vital issue, I cannot believe that a single recommendation by the ombudsman will have come as a great surprise to her.
	Several hon. Members have already put on record some of the problems with the tax credit system.

John Thurso: My hon. Friend will know that I raised the issue of tax credits in a Westminster Hall debate on 6 April when many of exactly the same points were raised. Specifically, the point was made that Citizens Advice Scotland believes that the debt that people are getting into as a result of the overpayments is in direct contravention of the policy of the Scottish Executive— so much so that Citizens Advice Scotland has had to issue a leaflet on the subject. Real hardship has been caused, and that is what we wish to address.

David Laws: I entirely agree with my hon. Friend's comments. It is precisely because this issue is causing so much hardship among those people who most depend on the tax credit system that the Government should take it seriously.
	It is worth recapping the problems with the tax credit system, because some Labour Members have sought to draw attention only to the aspects of the system that they think have worked, and are unaware of, or unwilling to acknowledge, the problems experienced. As the shadow Chancellor said, we are talking about almost 1.9 million overpayments and 700,000 underpayments, out of 5.7 million awards. That is an enormous problem rate, especially when it comes to clawing back overpayments and paying out on underpayments. The problem must be endemic to the system, if one third of awards are overpaid.
	Some £1.9 billion of taxpayers' money has been overpaid, unintentionally. A further £800 million will automatically not be recovered as a consequence of the £2,500 disregard when incomes rise. The Chief Secretary said that he saw the disregard as the equivalent of the personal income tax allowance, but I profoundly disagree with that statement. The personal income tax allowance is the amount that the Government set so that people do not pay tax on the initial amount of their income. The £2,500 disregard is designed purely to reduce the extent of the problem of endemic overpayment in such systems, which was seen in Australia years before the UK system was introduced. Of course it would be possible to get rid of most of the overpayments by having a much bigger disregard, of £5,000, £7,500 or £10,000. The Government would be able to say that all the overpayment problems had disappeared, but all that would do is shift the problem from overpayments to the disregard.

Frank Field: The hon. Gentleman mentioned the Australian experience. The Australians not only had a disregard system, but realised that once they were in a hole it was best to stop digging, so they wrote off the overpayments up to 1,000 Australian dollars.

David Laws: The right hon. Gentleman is exactly right and has for many years taken a very close interest in the development of tax credits. He draws attention to the problems in Australia that led to an ombudsman's report there two years ago in which the ombudsman criticised the Australian tax credits system, saying that the system inherently led to a large number of debts, that the debts arising from the scheme were affecting lower-income families, that the debts could be unavoidable and that they seemed to have an unfair retrospective effect. He was also concerned about the manner in which the debts were being recovered. We now find that all those issues are confronting us in the United Kingdom. The Government must have been aware of all those issues when they devised their policy, but they have failed to address all of them with the relatively minor changes to their own policy, such as the disregard.
	We have talked about the complications of the system and people's bafflement at trying to understand their awards and entitlements. Thanks to the parliamentary questions that the Treasury has answered—which is unusual on the subject of tax credits—we now know that 65.5 million award notices have been sent out in just two and a quarter years, including 34 million award notices last year alone. All hon. Members will be familiar with the experience of constituents coming to advice centres to describe their problems and reaching into their bags to bring out sheaves of tax credit payment papers. On Saturday, I saw a constituent who had nine separate award notices that had been issued in seven weeks, all with entirely different amounts. That is part of the problem with the system, and it has helped to cause the confusion among individuals who must then anticipate whether or not their award is correct.
	As the shadow Chancellor indicated, there has been a big rise in administrative costs. Four hundred staff have been allocated to handle complaints, and 3,200 staff are dealing with the dedicated helplines. There have been 21,600 compensation payments for bad service in the past year alone. The error rate in the system is 21.4 per cent. for the first year that we know of, as against a target of 10 per cent. and an error rate of 10 to 14 per cent. under the old system. Sir Nicholas Montagu, the then head of the Inland Revenue, told the Public Accounts Committee that he was confident that the error rate would be halved from that under the old system. What has happened instead is that it has doubled.
	While the Paymaster General seeks to sort out the problems with overpayments, 271,000 people have requested write-offs of overpayments—217,000 in 2004–05—and there have been 54,000 appeals in the first two months of this year alone. It is no wonder the tax credit administrators are struggling given that they must now make 271,000 separate judgments without any proper, statutory system of independent appeal. Although the Government's line on this seems to change from day to day, we have also been told that, so far, only £37 million of the £1.9 billion in overpayments has been written off, but the Treasury cannot tell us how much of the total overpayment has been recovered.

Edward Balls: The hon. Gentleman refers to the difference between the old and new systems in comparing staff numbers, complaints and whatever, but he does not make the point that the take-up rate under the old family credit system was slightly below 60 per cent. and that the take-up rate under the new tax credit system is about 80 per cent. and has exceeded expectations. Does he not agree that, although it is right that we focus on these issues and sort them out, the fact that the take-up rate exceeds expectations shows that the system is working better than the old one and that it is worth sorting out those problems so that it can work better in the future? Unlike the shadow Chancellor, will he tell us whether he supports the continuation of the tax credit system as a way to reduce child poverty?

Mr. Deputy Speaker: Order. The hon. Gentleman must learn to hone his interventions.

David Laws: I will take the first of those questions, Mr.Deputy Speaker. I am afraid that the hon. Gentleman, for whom I have a great deal of respect, still seems to be in denial about the system. Perhaps he has got too close to it. The Liberal Democrats are not trying to suggest that the tax credit system has made no important contributions, both in providing work incentives and in reducing poverty, but this debate is about the hundreds of thousands of people in real poverty whose situation is being massively exacerbated by a systemic failure that the Government must address. I shall come later to how the systemic problem, as well as the short-term administrative problem, may be dealt with.
	The situation has brought us to a state of affairs that affects even individuals who have been previously been cheerleaders for the tax credits system. I am thinking of an author who trumpeted tax credits in The Independent on Sunday this week and said that they had been a great success of the Government. However, even that individual, Mr. Prosser, says that the system is now a "bureaucratic mess" and that tax credits do not work well for families on low and middle incomes.

Dawn Primarolo: The hon. Gentleman is citing only part of the article. The author also had comments for those who wish to attack the system in principle using the problems with its administration. The article went on to say that the tax credits system was good. The hon. Gentleman should use the whole quote, or not use it at all.

David Laws: I am happy to read out more of the article. I will also be happy to accept the Paymaster General's point if she will accept that the article describes the system as a "bureaucratic mess" and says:
	"As a means of helping working families on low and middle incomes, tax credits are not working well."
	Regardless of how good she thinks the overall system is, I assure her that it will not help her, or be appreciated by the hundreds of thousands of people throughout the country with problems, if the Government continue to talk about the generality of why the tax credits system is good, but do nothing to sort out the practical problems that people are facing.

Dawn Primarolo: I am happy to confirm again to the House, as I have done repeatedly, that I have never shied away from points made about the failures of the IT system in the early days and the administration. However, although I have continued to press people, including the hon. Gentleman, to separate the improvements to the administration and IT that deliver the system and the principles of the system, he still has not done that. Does he support the eradication of child poverty and accept that the child tax credit contributes significantly to that cause? Will he now separate policy from administration and concentrate on helping us to ensure that the administration works?

David Laws: The right hon. Lady should be careful. She says that she has never understated the problems in the IT systems that affect tax credits, but she had better go back and read the ombudsman's report.
	I want to find out how many of the important recommendations made by the ombudsman the Government will accept. Having heard the Chief Secretary's relatively general speech, I hope that the Paymaster General will go into detail about that when she winds up the debate, because that is what people what to hear.
	May I start with a couple of less controversial points on which I hope the Paymaster General will be able to offer us some reassurance? Many organisations that are worried about the tax credits chaos have asked for a clearer award notice. They have suggested that the notice should contain clear information about the mechanism for appeals in the case of overpayment. I assume that she can confirm that she will be going ahead with a new award notice for 2006–07, so will she place a copy of the draft award notice in the Library? Will further amendments be made to the award notice in the light of the ombudsman's recommendations?
	The Paymaster General will be aware that the eighth and 11th recommendations of the ombudsman indicated that there should be a statutory right of independent appeal in the case of overpayment and that people should understand their appeal rights. That is also suggested in the early-day motion tabled by the right hon. Member for Birkenhead (Mr. Field). Can we have a clear answer on whether the Government accept the case for a statutory right of independent appeal, or was the Chief Secretary accurate when he said that that had been ruled out?
	Can we know whether the letter on overpayments that is sent to our constituents will give advice automatically on the additional tax credit payments that may be made to those people in hardship and on the possibility of interim awards for those in need? That important practical concern was raised by the ombudsman and I am not sure of the Government's response. On the first point in the submission by Citizens Advice, have the Government decided whether there will be a limit on the clawback of overpayments, which causes extreme poverty? What will be the rules and regulations on that?
	The Chief Secretary's explanation for the Prime Minister's comments in the House of Commons and for the Chancellor's comments on GMTV was so implausible that I am not interested in detaining the House by taking the argument seriously. What must be placed on the record is that the Prime Minister and the Chancellor of the Exchequer have on a number of occasions left people with the clear impression that, where there was official error, the overpayments would be written off. They said that in plain and simple terms.
	We now have the ludicrous letter from the Prime Minister, which I received yesterday, and the frankly ludicrous statement that the Chief Secretary was given to make. I do not blame him for that, but it is an implausible cover-up of the Government's position. It tries to persuade us that the Government had in mind all the time that, although there could be some write-off of awards, it would only be for those cases in which people could not possibly have worked it out for themselves. That is totally different from what the Prime Minister and the Chancellor said, and exactly the same position that the Inland Revenue has adopted for the past year. There has been no concession.

John Bercow: Does the hon. Gentleman agree that people should have the right to appeal, not only in respect of arguments over the facts of the case and responsibility for error, but in cases in which an excessively harsh timetable for repayment will exacerbate existing poverty?

David Laws: I very much agree. There must be a right of appeal if a recovery causes extreme hardship. Although the Government could do much more to notify people of entitlement to additional tax credits that should prevent that, there should be a backstop that does not rely on the decisions of Inland Revenue officials.

John Thurso: Does my hon. Friend agree that reasonableness is at the heart of the problem? When my constituents bring a case to me, they do not think it reasonable that they should have been able to work out something on a form that they barely understand, whereas the Inland Revenue administrators think that it is unreasonable that everyone should not be able to work out what to put on their form. Should not the Government accept that it is reasonable to stop the clawback for people like my constituents, who find it difficult to understand the form?

David Laws: My hon. Friend is right. Having seen probably 250 cases of tax credit overpayments in my constituency, I can vouch for the fact that a difficult judgment has to be made in a huge number of cases on whether the individual concerned could have reasonably known that an overpayment was being made. I would not want those decisions to rest solely with Inland Revenue staff with no rights of appeal.
	The most important thing for the Government to deal with in responding to the ombudsman's report is the second point in the recommendations on page 8. The Chief Secretary told us that the Government were going to accept it, but appeared to make a U-turn on that shortly afterwards. The recommendation concerns whether the additional mechanism for recovering overpayments is lawful and, even if it is, whether it constitutes maladministration.
	The QC who has advised the Child Poverty Action Group on this issue has made it clear that he considers the existing practice unlawful. He takes that view for a number of reasons, but particularly because no assessment is made before recovery is begun of whether recovery should go ahead under the code of practice. In other words, the Government recover first and ask questions later. The Paymaster General has written to me on this point to seek to clarify the Government's position. She maintains that the Government's existing position is lawful. That is not persuasive because the first argument that she advances is that the majority of overpayments are correctly repayable. On that basis, she seems to imply that all overpayments should be repayable.
	The ombudsman, in one of the overlooked but perhaps most important paragraphs of her report, 5.17, states:
	"Whatever the legal position, our view is that a fundamental unfairness arises where recovery . . . takes place to the detriment of a customer before COP 26"—
	that is code of practice 26—
	"has been considered. Effectively, the Revenue has fettered its own discretion by making an initial determination to commence recovery action, before it has considered the full facts of the case. That is maladministration."
	That is a biting criticism of the way in which the tax credit system is working. The Paymaster General has been honest enough to admit in her letter to me that
	"It is rational that we should operate a system that includes a presumption of recovery by means of reducing or stopping further payments while the investigation proceeds."
	It is recovery first and investigation later.
	The right hon. Lady attempted to tackle that point in earlier debates, including when the hon. Member for Nottingham, North (Mr. Allen) raised the issue in the debate in Westminster Hall. She was careful in the words that she used. She talked not of investigation first and then recovery, but of notification before recovery. Notification and investigation are very different words and they have different effects. The effect of the Government's existing policy is that someone who has an overpayment through no fault of their own and entirely through the incompetence of the Inland Revenue will have that money reclaimed by the Government. They will then have to try to stop the reclaim. It is clear as well from the Paymaster General that the Treasury's position is not that there will be an automatic stop but that recovery can be suspended while the dispute is resolved. That there can be negotiation puts an entirely different gloss on the Government's policy. It allows the Government to recover tax credit overpayments from people who received those overpayments through no fault of their own. That is a major issue and one that the Paymaster General needs to address today and in her response to the ombudsman's report.
	There is also the issue, which was raised by the shadow Chancellor, of whether the existing system is working effectively. The Government owe it to us and to themselves to investigate, two years into a new system, whether the payment mechanisms are sensible, whether they are working effectively and whether the transfer from a system of fixed awards, which we had under the working families tax credit and family credit, should be replaced with the existing backward-looking awards that are constantly changing.
	Anybody who has read, as I am sure that the hon. Members for Normanton and for Doncaster, North (Edward Miliband) have, the Joseph Rowntree Foundation report of 2003 about the tax credit systems in Australia and Canada—Australia has the British system, while Canada has a fixed system—will know that the evidence is not clear about which is the more favourable. The report states:
	"There is no evidence of dissatisfaction with the non-responsiveness of the Canadian system."
	It continues:
	"Is a system with retrospective recollection of overpayments more or less responsive than one that pays from the start according to the previous year's income?"
	The report states that the answer to that question is not "self-evident".

Edward Miliband: On a point of detail, the Australian system is not tolerant of changes in people's income, whereas the British system of tax credits allows for a £2,500 rise in income without any money being taken away from people.

David Laws: The hon. Gentleman is digging a large hole for himself. While he is correct that there is a disregard in the UK system, it has not dealt with the problems at all, because one third of awards are still overpaid. In Australia, which does not have the disregard, 39 per cent. of awards are overpaid. Here, it is 33 per cent., so there is not much difference. The Australians have had to continue tampering with their system and changing it with, for example, year-end corrections to deal with those problems. I know that the Government are not going to change their position today, but I urge them at least to investigate the matter and respect the findings of the ombudsman, who said that experience to date
	"raises the fundamental issue . . . as to whether a financial support system which includes a degree of inbuilt financial uncertainty can truly meet the needs"
	of this particularly vulnerable group of families.

Edward Balls: This is the nub of the issue. The hon. Gentleman can make a series of proposals to make the system work better but, by definition, the tax credits system includes overpayment because of the adjustment mechanism. We must consider how we deal with that. It is legitimate for him to say that the limit should not be £2,500 but a higher figure. Perhaps I would agree with that from experience. But does he support the current system of tax credits, or would he scrap it and introduce a different system?

David Laws: I do not know whether the hon. Gentleman is seeking deliberately to misrepresent my comments. I indicated very clearly that there is a genuine problem with the way in which the tax credits system works and with whether our system is less effective than a system of fixed awards. In Canada, a focus group—something that the Government should favour—has been working with child tax benefit recipients. When those people were asked whether they preferred a fixed or a flexible system, their response was a unanimous and loud negative to the system favoured by our Government.

Edward Miliband: rose—

David Laws: I must conclude my speech, I am afraid, or I will try the Deputy Speaker's patience.
	The Government should learn from experience. If they are not ready to do so, the new chairman of Her Majesty's Revenue and Customs, David Varney, is, because on 5 July the Financial Times reported that he said:
	"We haven't had enough experience of the system to make a sensible judgment in terms of annularity; we need to run a few cycles to see how it works . . . If there are real problems in discharging the policy then you'll have to debate what the right policy is."

Dawn Primarolo: David Varney did not say that to the Financial Times. The interview was recorded, and I am happy to give the hon. Gentleman and the hon. Member for Tatton (Mr. Osborne) a copy of what David Varney said to the Financial Times and what he said to the editor about the way in which his comments were reported.

David Laws: We would all be delighted to see a transcript of the interview. That would be beneficial. I noticed that a correction has not been published in the Financial Times, a reputable newspaper which, I am sure would correct any mis-statements.

Dawn Primarolo: I will the hon. Gentleman a copy of the letter that was sent for publication as well.

David Laws: We will all be enlightened when we see that letter and look forward to the apology from the Financial Times.
	Finally, I am concerned about the confusion among Ministers about the Government's tax credits policy. They and the Treasury are in denial about the problems that they have created. Until they come out of denial, they will not fix the problems that are causing of great deal of concern, discontent and poverty among many people on low incomes across the United Kingdom.

Frank Field: I shall make a short contribution and, as best I can, bring some of my constituents into the debate. The figures clearly show that large numbers of people in Birkenhead have been beneficiaries of the new tax credits system, but those who have come to the advice surgery, phoned and written to me all share one characteristic: they are all fairly poor. The question to which the Paymaster General suggested we should address ourselves today is not whether we all subscribe to the abolition of child poverty. Of course we do. The question that I pose, which the Opposition spokesman was not willing to answer, was whether we are spending £15 billion of taxpayers' money every year in the system in the most effective way to deal with child poverty.

Edward Balls: rose—

Frank Field: For goodness' sake. We know that my hon. Friend has a vested interest. I will develop an argument, then I will happily let him in. I have not said anything yet for him to intervene on.
	The question is whether the £15 billion is best spent. The question that has already been raised, which we need to address in the debate, is whether the system as it works for the poorest is salvageable, or whether there is something about the fact of being poor that makes it difficult to fit those people into the system. Now that I have set out my first point, I am happy to give way.

Edward Balls: I am grateful to my right hon. Friend. On a point of clarification, he said in his opening remarks that we all shared the goal of reducing child poverty. We consistently asked the shadow Chancellor whether he shared our goal of halving child poverty at the end of the decade, and he refused to answer. I fully accept that my right hon. Friend shares that goal, but does he agree that the hon. Member for Tatton (Mr. Osborne) did not?

Frank Field: It is easy to sign up to the abolition of child poverty. Even though he did not make a clear statement, I would expect the shadow Chancellor to say so. The crucial issue is how we go about tackling child poverty and whether an alternative Chancellor would be prepared to marshal the kind of resources that the present Chancellor has marshalled to tackle child poverty. I question whether we use those resources most effectively, but I do not for a moment doubt the Chancellor's passion to do something about child poverty. Signing up to abolishing it is easy. I wanted, but failed to gain, a commitment from the Opposition that they would commit similar sums to that objective, however they spent it.

George Osborne: I think that I made it clear that we are all committed to reducing child poverty. On the second point, at the general election, when we produced comprehensive spending plans, we proposed to spend exactly the same as the Government on tax credits. We are entitled to ask whether, in the light of the ombudsman's report, we should review the structure of the tax credits and how they are administered.

Frank Field: I hope that, before the end of the Parliament, the hon. Gentleman might be more radical than that, but it is early in the Parliament and the Government must know that they face not only a debate tonight, but debates on the system throughout the Parliament. They may be able to command the support of their Back Benchers tonight. I hope that it will not be a different matter—it might be—four years down the track.
	The question that we have to address in our conversation with the Government this evening is whether the problems that we have encountered on behalf of our constituents are—the term has already been used—glitches or something structural. I hate the word "glitches". It is somehow cold, efficient, removed. All of us see what a glitch does to many of our constituents living on modest incomes. It is not a glitch; it is almost life and death. I have had families in my constituency who thought that moving them into work would be a godsend. The figures showed that they would be better off, but they found most of the money snatched away, without any explanation or understanding why it was being removed from them. Worse than that, the system is such a treadmill that one cannot get off it: once one has claimed the credit, it has to run for the duration.
	One of my constituents comes quickly to mind. There was a mistake over his wife's earnings. His wife then became ill, and he was reduced to an insignificant sum of money on which the whole family had to survive. He could not afford bus fares to get to work and had to walk three miles to and from work every day. But because it was alleged that he had been overpaid, he could not sign off from tax credits and sign on for means-tested jobseeker's allowance as the office claimed that he had the money that took him over the eligibility threshold for the jobseeker's allowance. There was no escape for my constituent until the end of the claim period.
	We have to decide whether these are merely glitches that will be ironed out or whether for the very poorest there is something basically wrong with the system.

Dawn Primarolo: I agree with my right hon. Friend. When we are talking about people's lives, the word "glitches" is not appropriate. The central question that he is asking is whether the problem is structural or capable of being corrected, and what in particular needs to be done to answer that question. He is absolutely right. The House needs to concentrate on those points and will need to return to them time and again. I have no objection to that.

Mr. Deputy Speaker: Order. Front Benchers have taken a massive slice out of this debate. I am anxious to protect the interests of Back Benchers so as to allow them as much of the remaining time as possible.

Frank Field: I do not want to provoke Front Benchers again, Mr. Deputy Speaker, but my heart sank slightly when the Paymaster General kindly said that we will keep returning to this issue. I hope that she will tell us tonight about the changes that some of us wish for and that the ombudsman's report calls for.
	Let us be in no doubt about how important this benefit now is to our poorest constituents. More than a quarter of all claims are made by those on under £13,000 a year, who comprise a third of the difficult cases. The problems—the miscalculations, overpayments, underpayments and automatic clawings back—disproportionately affect the poorest. We have to ask whether it is possible to run a system that operates over a time scale of 52 weeks while matching the needs of our poorest constituents, whose financial needs often change very quickly.
	Decades ago, this House debated a tax credits system proposed in a Green Paper by the Heath Government. Those of us in the poverty lobby thought it unworkable, because we had seen from America that one cannot marry a benefit system that operates on a weekly basis and a tax system that is cumulative over 52 weeks of the year. The huge innovation in that proposed tax credits system was to abolish the cumulative nature of individual taxation so that, far from operating over 52 weeks, it would operate on a weekly basis, with last week's income relating to this week's tax credit. The question is whether, unless we are prepared to be that radical in changing the nature of the tax system, we can ever have a system that delivers for our poorest constituents, who can most benefit from the wish that the Chancellor clearly has to abolish child poverty as we know it in our society.
	In moving towards that goal, there are three reforms in the ombudsman's report that I most want to hear the Government say that they have embraced. In the previous Parliament, I tabled an amendment to the Finance Bill that would have placed a duty on the Government to issue wage slips to everybody who draws tax credit so that they could understand how it had been computed. For one reason or another, the amendment was not called. If we are to empower our constituents, it is crucial that they know how their tax credit has been worked out so that they can quickly ring up when they think it is wrong.
	Secondly, the Government must concede that they should not claw back until our constituents have had the right to dispute whether the clawback is correct. I was worried by the Chief Secretary because, in a moment's hesitation at the Dispatch Box, he muddled that with writing off the wrong payments. The Chief Secretary to the Treasury is one of the Government's heavy hitters. I would normally say that, if we were in difficulties, we would send him out to bat for us. However, as he reflects on the debate, which also reflects the Government's position, he will perhaps realise that he has not previously had a more difficult time on the Floor of the House, trying to defend the tax credit system, than he had today. I appreciate that he does not want to be in that position again. My guess is, therefore, that he will take more than a personal interest in the reforms that the Government propose.
	The third reform that we greatly hope that the Paymaster General will outline is an independent system of appeal for occasions when both sides cannot agree on the facts or about whether the rate of clawback is fair.
	I refer hon. Members to the last third of the last paragraph of the ombudsman's report. It makes chilling reading for anyone who understands the official code. The ombudsman, in reflecting on what has happened to the poor in the system, asks the fundamental question whether it can work adequately on their behalf. She goes on to say that she, as a mere official, cannot possibly comment or provide a conclusion on whether the system is salvageable, but she continues by saying that it raises the most profound policy issues. That means that her doubts are grave indeed.
	I do not doubt that many people in my constituency rejoice that we have tax credits and that the system has worked well for them. However, the sad fact is that it has worked best for those who are richest, not those who are poorest. That is not the Chancellor's aim—I have never doubted his seriousness about tackling child poverty. The Paymaster General should outline tonight the immediate reforms that she can or will propose on the Government's behalf to prevent the lives of our poorest constituents from being smashed as forces beyond their control damage their ability to balance their weekly budgets. We need to know what reforms we may have to lessen that effect.
	At some stage, however, we must consider whether the tax credit system, as it is currently formulated, can ever deliver to those who are in the greatest poverty in our society.

Andrew Selous: Like every other hon. Member, I have experience of many constituents complaining to me about the problems of administration of the tax credit system. I, too, have a constituent in a similar position to that of the hon. Member for Yeovil (Mr. Laws), who has received eight awards in the past nine or so weeks.
	I shall be listening carefully to the Paymaster General to hear whether the Government will follow all the parliamentary ombudsman's recommendations. Her response will be the most important part of the debate.
	I want to look at tax credits from a slightly different point of view from those of other Members who have spoken this afternoon. I salute the Government's objective of trying to use tax credits to reduce poverty. I use the term "poverty" in general because I am not sure whether the focus on child poverty—to which tax credits are integral, so far as the Government are concerned—is necessarily healthy. In many other European countries, the focus is on family poverty, and such a focus might have something to teach us in relation to the administration of tax credits.
	The figures that the Department for Work and Pensions released on 30 March from its study of households on below-average incomes show that child poverty fell in 2003–04 by only 100,000. I say "only" because that was the year in which £2.5 billion was spent on tax credits, and all the analysts expected a much more significant fall in that year. Indeed, the figures show that, after housing costs were taken into account, child poverty remained static.
	The figures also show that there was no reduction in the number of poor children living in two-parent or couple families in 2003–04. That is significant because 57 per cent. of children living in poverty live in two-parent families. There are serious and worrying anomalies relating to children living in two-parent or couple families. They make up the biggest cohort of children living in poverty. It is the task of the Government and the Opposition—indeed, of all of us in the House—who are thinking seriously about how to reduce child poverty to ensure that, whatever system we come up with, these perverse unintended consequences are rectified. They are having damaging consequences for our country.
	I shall illustrate that point with some specific examples. In 2003–04, a couple family with two children would have needed an income of £262 a week to get out of poverty, whereas for a lone parent with two children that figure would be only £182. Those are after-housing-costs and after-tax figures. To get the income necessary to get out of poverty, a single-earner couple in social housing paying rent of £53 a week would need to earn £336 a week, as opposed to only £86 a week after the implementation of the tax credit system. That is nearly four times as much, and it represents a very wide disparity.
	The former senior Inland Revenue officers, Don Draper and Leonard Beighton, have released figures today showing that, for the tax year 2005–06, a couple with two children in social housing on half average earnings paying a weekly rent of £53 would be left £22 below the poverty line, whereas a lone parent family with two children in those circumstances would be left £66 above it. I am delighted that that lone parent family will be £66 above the poverty line, and no part of my proposals would involve taking money from lone parents in any way. I want to make that very clear to the House. Surely, however, that situation must be of concern. Most children who live in poverty—57 per cent. of them—live in couple families, and according to the example that I have just given, they would be £22 below the poverty line. That is before any child support, which is disregarded for tax credit purposes. My concern is that the Government will not achieve their target of halving child poverty by 2010 because of some unintended, but very significant, flaws in the administration of the tax credit system.

Rob Marris: I seem to remember having the great pleasure during the last Parliament of serving with the hon. Gentleman on the Work and Pensions Committee. The Committee produced a report on child poverty on the information then available, and, as I recall, the whole Committee expected the Government to reach their 2010 target. Is the hon. Gentleman now saying that he does not think that that was right, or have I misremembered his signing up to that report?

Andrew Selous: No, the figures that I have just quoted are from the study of households on below-average incomes by the Department for Work and Pensions, which was only released on 30 March this year, after the hon. Gentleman and I had finished our pleasant period of serving on the Select Committee. So these figures were published after our discussions at that time.
	The tax credit system desperately needs to be refocused, so as to do more for poor couples in work. I shall give another example. A couple with one earner on an average income of £462 a week and a below-average mortgage, and with children aged two and four, would be left with £223 after tax and housing costs. However, were the couple to split up, they would be left with £369, which is £146 more. If they were living in private rented accommodation, the figures would be accentuated even more.

Eric Martlew: I have been listening closely to the hon. Gentleman, and I heard him say that he did not want to take any money away from single parents. Will he explain how the extra money would be given to couples to make up the difference?

Andrew Selous: Yes, with pleasure. We have to take into account the system that we have now, but in future, we should rectify the imbalance. That would probably mean adjusting the system, and I would be more interested in the family with children that is £22 below the poverty line than the family with children that is £66 above it, as I am sure the hon. Gentleman would be if such people were his constituents. We need to tweak the system in the future—we do not propose taking money away from anyone now—to create a genuinely level playing field. We would then not discriminate against children because of their family situation. That is the consequence of the present system, and there has not been nearly enough acknowledgment of that fact.
	I am sure that the hon. Gentleman salutes the Child Poverty Action Group for its work in this area over many years. In its recent document, "Ten Steps to a Society Free of Child Poverty", it says:
	"The focus on benefits for children has been welcome, but children's benefits do not act in isolation. It is family income which must be considered."
	That is the point that I am making. There has not been sufficient recognition of the problems in that area.
	There is evidence that the tax credit system is having some perverse unintended consequences for our constituents. John Haskey, formerly of the Office for National Statistics and now a visiting research fellow at Oxford university, estimates that some 2 million men and 2 million women aged between 16 and 59 have a partner living elsewhere, and that there are 1.2 million couples who are living apart together—LATs, as they are known in the new sociological jargon. A quarter of all lone mothers with children have a partner who lives elsewhere. It is those couples who are likely to be discouraged from living together by the operation of the tax credit system, and who could blame them? If they choose to marry or cohabit, they will lose most of their tax credits, which would make many of them worse off, even after the reduced housing costs that would result.
	If we are serious about tackling child poverty, particularly among the majority cohort whose parents are in work and living together, we must address these serious issues. I hope that the figures released on 30 March by the Department for Work and Pensions will sound a warning note to the Government, and that they will take them into account when they consider the future design of the tax credit system. We might then have a tax credit system that does not discriminate against any particular family form. That would go a long way towards encouraging family stability, which all of us in the House want to see fostered.

Stephen Dorrell: I am delighted to follow my hon. Friend the Member for South-West Bedfordshire (Andrew Selous), who made some important points about the distributional effect of the current structure of benefits operated within the tax credit system. The points that I want to make, however, follow more naturally from those made by the right hon. Member for Birkenhead (Mr. Field).
	I have a slightly odd personal history on the issue of tax credits. When I was appointed as a fresh-faced Financial Secretary to the Treasury in the 1990s, I was interested in the question of whether some of the principles of tax credits first espoused in the Green Paper published by the Heath Government, to which the right hon. Member for Birkenhead referred, could be excavated. It may be of some interest to the House to know why, as a Treasury Minister who was relatively benignly inclined towards the principle of tax credits, I was dissuaded from that and persuaded that the costs of that system, in terms of excessive bureaucracy and the risks of genuine injustice to poor people, outweighed any potential benefits. Those costs are now manifest in our constituents' lives, and they should give us pause for thought now along the lines suggested by the right hon. Gentleman.
	The right hon. Gentleman is surely right: there is no disagreement about the core objectives of policy in this field. Despite what the hon. Members for Doncaster, North (Edward Miliband) and for Normanton (Ed Balls) might want to be the case, of course Members in all parts of the House want to see poverty eliminated and the system of benefits that we use to do that reconciled as far as is possible with the preservation of incentives for people in work. Those were the two principles that the Chancellor espoused as the primary policy drivers for the introduction of his tax credit system. Indeed, the Chancellor and his acolytes sometimes like to talk as though they were the first people in history ever to be interested in the elimination of poverty and the reconciliation of a benefits system with work incentives.

David Taylor: rose—

Edward Miliband: rose—

Stephen Dorrell: As the right hon. Member for Birkenhead reminded us, we have been discussing this issue for 40 years. He referred to tax credits, but he might also have referred to a book that Daniel Moynihan wrote at around the same time on the introduction of a negative income tax. These are not new ideas. What is new is that the Chancellor concluded that all the difficulties identified by the right hon. Member for Birkenhead and anyone else who had taken a serious interest in the issue throughout the period could at best be wished away and at worst overridden by mere expression of political will. The Chancellor and hisacolytes made the mistake of fundamentally underestimating the complexity and difficulties inherent in the policy that they were determined to espouse.

David Taylor: The right hon. Gentleman said almost in passing that of course we all want to get rid of poverty. However, poverty is, by definition, a relative, statistical concept. Will he confirm to the House that in fact he was a Minister in a Government who positively moved away from trying to have a more equitable distribution of income and wealth, and who positively espoused the trickle-down theory that tackled neither of those problems?

Stephen Dorrell: What I will confirm to the House is that I was a supporter and member of a Government who saw huge improvements in living standards across the community and in the working of the labour market. The hon. Gentleman might prefer to see his Government reverse that but as he knows, his right hon. Friends refuse to do so because they know that the labour market changes that we introduced have delivered improving living standards across the piece. He is right that poverty as measured is a relative concept, which is why it is a more accurate definition of policy objectives, in my view, to espouse the raising of living standards across the piece, providing to every section of the community better access to opportunity to improve their living standards. The problem with the tax credit system that we are debating today is that it has not reconciled the dangers associated with excessive complexity and bureaucracy with the delivery of other public policy objectives.
	Why was I persuaded, as a fresh-faced Financial Secretary, that the system was not worth the candle? First, as has been pointed out several times previously, it is simply a fallacy to consider the benefit system and the tax system and to say that they are both to some extent means-related and that they can therefore be merged into the same system. That is the approach that the Chancellor has taken—to imagine that because the Inland Revenue in its old incarnation made an assessment of means, and because the Department for Work and Pensions made an assessment of means, we could somehow merge the two systems into a single tax and benefit system. As the right hon. Member for Birkenhead said, that view overlooks the obvious but fundamental point that the tax system is based on an annual assessment of means, whereas the benefit system, if it is to provide secure income to the benefit recipient, must be based on a much more short-term assessment of the needs of the individual.
	As for all the arguments that we have heard elucidated today about the difficulties—and moreover the injustices—associated with reclaiming overpayment of tax credits, those difficulties arise because the system now seeks to reconcile retrospectively a means-tested benefit system back into the previous tax year. That mismatch between the two systems ultimately led earlier policymakers to conclude that we should not go down that route, and still leads me to believe that the Government might ultimately have to conclude that their system must be fundamentally rewritten. I say that as someone who does not think that we should change the rules of such systems every six months, which in itself leads to further complexity and injustice.
	If Ministers really believe that one more heave will deliver a sufficient improvement in the operation of the system to address all its difficulties, they are entitled to a hearing. But as one who considered it in the past, and who has seen too many of the predictions that were then used to dissuade me from that course come true, I allow myself a certain scepticism as to whether one more heave will in truth be enough to eliminate all those difficulties.
	There is one other aspect, on which we have not touched today, that has made the system even more complex than it probably otherwise needed to be: the Chancellor's view—with which, again, I have some sympathy—that some of the combined effect of the tax system and benefit withdrawal led to sharp work disincentives as people saw their benefits being withdrawn. The background papers at the time that the tax credit system was introduced referred to the withdrawal ratio for family credit of 70 per cent.—for every £10 of extra earnings that the family secured, £7 was lost in family credit withdrawn—and the Chancellor sought to reduce that rate of tax and benefit withdrawal. There is a tension there, too, however, as whenever one tries to reduce the rate of taper, one extends further up the income scale and includes more families in precisely the problem that one seeks to control. Not only has the system been made much more complex by the merging of the tax and benefit systems, but the reach of the system has been extended further up the income scale, so that more families are affected than were affected by the previous benefit structure. If we stand back, we see that the system is inherently complex, regardless of the set of rules that we operate. We have voluntarily made it more complex by mixing an annual cycle with a much more short-term means-assessment cycle, and we have increased the number of people affected by extending it further up the income scale.
	Let us step back from the big picture. We then see that the complexities created by that system have caused real injustice, and real concern and worry, to individual citizens on low incomes, who now fill our surgeries. At this point, I ask myself whether the price paid by those people for the system that the Chancellor has willed on us is a price worth paying.
	I do not believe that the problems we see in our surgeries result from inadequate computer programming or inadequate training of clerical staff. To believe that would be to make scapegoats of people who have been given an impossible task. The real issue is that policy makers at the highest level have been presented with choices and have made the wrong call. The people paying the price for that wrong call are the people in our surgeries who are worried sick, literally in some cases, by their inability to understand how to dig themselves out of the hole into which those policy makers have put them.

Edward Miliband: It is a pleasure to follow the right hon. Member for Charnwood (Mr. Dorrell). He is of course a distinguished Member of Parliament. He was also a distinguished Treasury Minister, and was, I believe, one of the Ministers in the last Government who did care about poverty issues. I therefore think that we should take what he says seriously. It is also a pleasure to speak in the same debate as my right hon. Friend the Member for Birkenhead (Mr. Field), who, as we all know, has a very distinguished record on tackling poverty both in the House and outside.
	It would have been good if the start of the debate had featured a recognition by both sides of the context in which we are discussing tax credit administration: a context in which, under the Government of whom the right hon. Member for Charnwood was a part, child poverty increased from about 1 million to 4 million. I know that the right hon. Gentleman cared about child poverty, but it increased none the less, by 3 million. Many people were in dire need, but nothing was done. Since 1997 child poverty has fallen, by about 1 million. That is not a bad record: child poverty has fallen, after trebling under the last Government.
	Of course it is right to acknowledge that there are problems in the system, and my right hon. Friend the Paymaster General has acknowledged that. I think that we need to ask five questions. Does the system tackle poverty? Does it encourage people to work? Is it properly taken up? Is it well targeted? Does it take the stigma away from claimants? I believe that those questions are relevant to a discussion of poverty and the means of tackling it.
	I have already drawn attention to the impact of working families tax credit and its successors on the tackling of poverty. I am now speaking for the people who have had bad experiences with the tax credit system, but also for the people receiving tax credits—8,000 in my constituency—many of whom told me during the general election campaign that tax credits had had a huge and positive effect on their lives. If other Members are honest, they will say that their constituencies also contain such people. It would obviously be wrong to deny that there are people who face problems, but it would be equally wrong to deny that the lives of many others have been transformed by tax credits. Members need not take my word for it; they need only read the ombudsman's report. She said that the undertaking had been "broadly successful", and—this is on page 56—
	"for the majority of the Revenue's six million or so tax credits customers, the system appears to have worked well."

Andrew Selous: May I tempt the hon. Gentleman to add a sixth question to the five that he quite properly raised earlier? It is the question that I posed in my speech. Is it right to operate a system that constitutes a huge financial disincentive for people who want to live together? They are penalised significantly if they do so, week by week.

Edward Miliband: I do not believe that people marry, stay together or do not stay together on the basis of how the system works, but the hon. Gentleman made a well-informed speech, to which I am sure the Paymaster General and others paid attention. I agree with my hon. Friend the Member for North-West Leicestershire (David Taylor): if the hon. Gentleman wants to give those with partners a greater incentive, he must find the money from somewhere.
	Let me return to my five questions. I think that the system has worked well in tackling poverty. Obviously there have been significant problems, to which the hon. Member for Tatton (Mr. Osborne) drew attention. My second question was "Does the system encourage people to work?" I think that it has done that, and indeed the figures are there for all to see. We have seen 2 million jobs created, and we have seen the rate of single-parent employment rise.
	I know that the hon. Member for Yeovil (Mr. Laws) favours a fixed system of tax credit awards, but that creates its own injustices. I do not think that the argument about a fixed versus a responsive system is particularly ideological. However, under an annual system basing awards on the previous year's income, those whose incomes had fallen for whatever reason would not be told "We will give you and your family more money." They would be told "We are sorry, but there is nothing we can do. You are stuck with the award based on last year's income." As the Paymaster General has said a number of times in the House, we can have a responsive system—a system that responds to changes in people's circumstances—or a fixed system.

David Laws: Is it so obvious to the hon. Gentleman—and if so, why—that the system chosen by the Government is superior to a fixed system? Would it not make sense for the Government to review the evidence of the last two years to establish whether a fixed system could be better?

Edward Miliband: Time will tell, but I am still convinced that a responsive system is better, and I shall explain why shortly.
	My third question concerned take-up. I am surprised that so few Members mentioned it. Take-up of family credit in the first year was 57 per cent.; take-up in the first year of this system was 80 per cent., which is pretty good going for a means-tested, income-related benefit. My right hon. Friend the Member for Birkenhead would know better than I, but I should have thought that it was unprecedented. Six million families and 10 million children have been helped.
	One reason for that is the fact that the system is non-stigmatising: it is part of the overall tax system. There is a significant prize to be gained from not having a system aimed at the poor, providing an income top-up for the bottom third of the population or even fewer people. Under such a system, even those who are working must go to the social security office if they are to have a living income.
	My fourth question was, "Is the system well targeted?" Members have mentioned how high up the income scale the tax credit system goes. In fact, 40 per cent. of the benefit goes to the bottom 20 per cent. of families, so it is a reasonably well-targeted system. The shadow Chancellor referred to people on £66,000 a year, but the people at the very top do not get very much money out of the system—if they bother to apply. They get the equivalent of the old children's tax credit, which is a maximum of £10 a week. The system is about lower and middle-income families. It is true that it is not for the small minority—I am rather in favour of the fact that these credits go to a larger proportion of the population—but no one can deny that this is a well-targeted system.
	My fifth question was, is the system de-stigmatising? For many years, we have had all kinds of social security benefits, but huge stigma has attached to them. We sometimes witness the same problem with the pension credit, which is in fact a social security benefit. Some elderly people say, "I'm not sure about claiming it because I do not want to have to claim benefits." People do not say the same about tax credits, so in that regard we have made a huge advance. In fact, in some ways it is a revolution. We have removed the division between the deserving and the undeserving poor: we have changed a system that required "deserving" taxpayers to pay for "undeserving" benefit recipients. In fact, doing so was the motivation behind the scrutiny of the system that took place in the 1970s.
	I am surprised that this achievement has not been more greatly acknowledged during this debate. I do not want to live in a country in which people feel guilty about claiming a top-up for working. We could have introduced the minimum wage at the level to which tax credits raise people's income, but as Conservative Members would doubtless have pointed out, doing so would destroy jobs. Indeed, I find myself in a slightly ironic position. I nipped out earlier to have the pleasure of being involved in my first statutory instrument debate, which was on the national minimum wage. What did I hear in the Committee Room Upstairs? I heard great plaudits for the national minimum wage and for tax credits; indeed, there was a progressive consensus throughout the Committee on the role of both. However, I returned to this Chamber to hear diatribes from the Opposition against tax credits.
	The tax credit system answers my five questions and works well. There are significant administrative and other problems, and we should of course apologise—as the Paymaster General has—for the hurt and distress that has been caused. But one thing struck me on listening to the shadow Chancellor's contribution. We heard from him a 26-minute diatribe against the tax credit system, and about all manner of cases, for which we have sympathy. At the end, we heard the clarion call not to abolish tax credits, but for a far-reaching review. I, too, am in favour of reviewing the system's working, but there is a very good reason why the shadow Chancellor did not commit to abolishing tax credits at the next election, which he could easily have done, given his diatribe against them. He knows that, fundamentally, the system is popular with the majority of recipients—the majority of recipients in my constituency, for example. That is why he has not committed to abolishing it.
	The Government have a responsibility to sort out the problems in the system, but we should all acknowledge the advances that have been made under it. Let us have a rational debate about the way in which it works, but let us please do so in the proper context. This Government have made work pay and tackled poverty—something that was never achieved in 18 years of the previous Conservative Government.

Peter Bone: I thank you, Mr. Deputy Speaker, for calling me to speak on an issue with which every Member of this House is doubtless only too familiar. I went to the House of Commons Library to research the tax credits system, and the librarian was most helpful. She tapped into her computer the phrase "tax credits", and the printer started to produce page after page. Suddenly, she screamed, "But it's all gobbledegook!" I have those 25 pages of complete gobbledegook in my hand. Perhaps the explanation is that there was a glitch in the Library's computer system. However, as a new Member I have been told that everything produced by the House of Commons Library is always accurate, so I suspect that the librarian's initial view—that the tax credit system is "all gobbledegook"—might be right. There is one thing, however, of which I am absolutely certain: many of my constituents believe the tax credit system to be complete gobbledegook.
	The tax credit system is so confusing and complicated that no one seems to know what they are entitled to. The 2000 Budget stated that an integrated child tax credit would
	"improve the transparency and administration of income-related payments through the tax and benefit system."
	Has transparency and administration improved? It seems to me that the current system, which largely revolves around the highly fluid concept of what is "reasonable", has achieved the exact opposite.  Let us consider the forms that claimants must fill in to apply for tax credits. As a chartered accountant, I am not ashamed to say that I find them confusing. I am professionally trained—how on earth is the average person, who relies on the extra income that tax credits generate, meant to understand them? Tax credits are meant to help the most vulnerable in our society. They are meant to encourage people to come off welfare and to go back to work. They are meant to make life just that bit more comfortable for those on low or moderate incomes, yet these are the very people whom the system is penalising by being inefficient, bewildering and incompetent.
	I am very grateful to be able to speak about an issue that affects so many of my constituents in Wellingborough and Rushden. I am sure that I am not alone in finding that a good majority of the constituency postbag consists of letters from constituents who need help with, and clarification of, their tax credit payments. Indeed, half those who ask for help at my weekly surgeries ask about this very issue. I was interested to read the Paymaster General's statistics. According to them, between April and December 2004 the Tax Credit Office, Treasury Ministers and members of the Board of Inland Revenue received almost 6,000 letters from MPs who were trying to sort out the many problems that their constituents were experiencing—

Ian Austin: The hon. Gentleman positions himself as being on the side of the low paid in his constituency, but I recall that he once boasted of paying his employees £1 an hour. Does he think that that was the right thing to do, and does he think that tax credits are designed to help those who are left on such low wages?

Peter Bone: I will treat that point with the contempt it deserves; no such boast was ever made.
	Constituents have problems with tax credit payments, with overpayments, with lack of payments and with no payments at all. In the tax year from April 2003 to March 2004, the Tax Credit Office hotline for MPs took more than 19,000 calls. That is 19,000 calls from MPs alone, who have had to get involved because their constituents have hit a brick wall and cannot get any further by themselves. Thanks to the system's incompetence, this problem is widespread and affects vulnerable families right across the country, so it is no surprise to learn that the two latest reports on tax credits were less than complimentary about this fundamentally flawed system.
	Given the tax credit system's very nature, it will always fail the most vulnerable in our society. Because it has so many different elements, it can only confuse and confound those who claim tax credits. Claimants have to estimate their income for the following year, which in itself gives rise to massive complications. But the real problems come when a claimant's circumstances change. Claimants are asked to notify the Tax Credit Office of certain changes within three months, though for other changes notification can wait until the end of the financial year. However, like many elements of this baffling system, precisely what changes need to be declared and when is just not clear.
	Many of my constituents who contact me for help have told me that, to be on the safe side, they inform the Tax Credit Office of all changes. One would think that that was very sensible of them, but it is here that the problem starts for thousands of families who are being penalised by the system. Much of my tax credit case work is taken up by constituents who have had their tax credits stopped completely due to overpayments in previous months. In some cases, the Tax Credit Office states that the overpayments will not be recovered as it was an error by that office in the first place. Why, then, did it stop the tax credits completely and why are those credits continuing to be stopped? In almost all the cases that I have dealt with, the claimant informed the Tax Credit Office of changes to their circumstances. In many cases, that office failed to update its records either through computer error or inefficiency, yet it is my constituents, along with many others, that suffer. In fact, according to the latest reports, nearly 2 million families have suffered.
	How is a family meant to plan for the future—financially or otherwise—if they never know exactly what is going into the bank account each month? The rules and regulations of tax credits state that people do not need to pay back an overpayment if they reasonably believed that it was a correct statement of what they should have received. However, what is "reasonable"? It is another open-ended, fluid and confusing term, which means all things to all men and penalises the very people that the system is supposed to help. Families often do not know their financial situation from one day to the next and while the correct procedures are not being followed to update the tax credits computer system when changes occur, those families will continue to live in financial limbo.
	As for the cost of bureaucracy and waste, the Government, as usual, do not disappoint. The sheer volume of forms, the fact that payments are made through PAYE rather than directly to the claimant and the vulnerability of the system to massive fraud are all costing the taxpayer dearly—about £400 million a year and with nearly 7,500 people working the system.
	I would like to finish by giving just one example of how the tax credit system has failed those who need it most. A constituent came to me in desperate need of help—her case comes to the crux of why the system is failing. She was about to be evicted from her council house for being severely behind in her rent and for being unable to keep up her payments on her council tax. It all started when she had to leave work due to illness. She was incorrectly paid working tax credit instead of incapacity benefit. Of course, it turned out that she was being overpaid tax credits and the Revenue asked her to pay the money back. Not only was she not in a financial position to do so, but she was also penalised by the council for receiving tax credits, which counted against her housing and council tax benefit.
	After several attempts to contact the Tax Credit Office to advise it that her tax credits must cease, she was still receiving the tax credit payments 14 weeks later. Because she was receiving no other benefits due to the overpayment, that is all that she and her children had to live on. When she rang that office again, she was told that her case was stuck in processing and that she would just have to wait her turn. Unfortunately, hers is not a unique case, but it is wholly unacceptable. The current tax credit system is, by its very nature, inefficient and fundamentally flawed and it penalises the most vulnerable of our society. Two million families have suffered under that system, which relies on staff regularly updating claimants' information and a computer system that properly processes the correct data. At the moment, we have neither. How long will it be before the Government realise that micro-management and bureaucracy do nothing but penalise the most vulnerable people in our society?

Richard Spring: Looking back on the debate, one realises that this really is a case of the road to hell being paved with good intentions. Back in 1998, when Martin Taylor submitted his report "Work Incentives" after observing the taxation and benefit system, he said:
	"there is no reason why both systems should not contribute to the same objectives, providing the means to improve work incentives and relieve poverty."
	The difficulty in reality is that IT systems are never easy. The truth is that the Government's record on them does not inspire confidence. The Child Support Agency's computer system, which cost nearly £500 million, failed, leading to the resignation of the chief executive. Staff at the Department for Work and Pensions were unable to process new benefits and pension claims for several days because the system went down. The computer systems of the Passport Service, the Criminal Records Bureau and National Air Traffic Services have also had problems. And so we go on.
	In November, the National Audit Office, commenting critically on IT problems, cited inter alia a lack of clear senior management and ministerial ownership and leadership. That has certainly been the case in this instance. The Paymaster General told the House on 7 February:
	"The IT support for New Tax Credits is a major new system. The system has been stable and performing very well in terms of availability and speed for well over a year."—[Official Report, 7 February 2005; Vol. 430, c. 1245W.]
	That is in contrast to what Steve Lamey, the chief information officer at Her Majesty's Revenue and Customs, said:
	"If I were an information technology historian, I would simply love it."
	With the introduction of this hugely complex system, warning bells should have been sounded a little earlier, before the problems we continue to hear about emerged.
	We hear that of the Inland Revenue's 90 million letters sent out each year, 35 per cent. are returned and 31 million are wrongly addressed—and 29 per cent. of PAYE codings are incorrect. The mood music is clear. Even the Labour thinkers Anthony Giddens and Patrick Diamond have spoken about a "complicated means testing infrastructure" in respect of tax credits.
	I would point out to the Paymaster General that the years between 1999 and 2003 saw enormous changes in the benefits system. At one point, we had the introduction of the working families tax credit, the disabled person's tax credit and the child care tax credit—and later we had the abolition of the working families tax credit, the disabled person's tax credit, the children's tax credit, the baby tax credit and the employment credit. The former shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Havant (Mr. Willetts), observed:
	"So, since October 1999, the Government will have introduced five new tax credits for families, scrapped four of them and then introduced two new ones. That averages out at a new tax credit for families every six months."
	Where has all that landed us? As a press release relating to a Citizens Advice service report graphically expressed it:
	"In the most extreme cases, CAB clients have been threatened with repossession or eviction. Some have had to give up work because they are unable to pay for child care. CAB advisers have had to arrange Salvation Army food parcels for families left without enough money to eat. Tax credits staff have even told some families they must take out high-cost loans to repay overpayments . . . CAB advisers have found it impossible to resolve even simple problems, because tax credit IT systems have left helpline advisers unable to provide accurate information, and because letters have gone unanswered, sometimes for moths."
	What we have seen is simply grotesque—incidents of hardship, anxiety and bureaucratic incompetence on an unprecedented scale. It is ludicrous to describe the reality using terms such as "stable" and "performing well". We know that the Government are trying to recoup £1.9 billion for 2003–04, and that they will not pursue a further £800 million from recipients who fall within the 2005 disregard.
	How will that be dealt with in the Government accounts? That is an interesting question, and I have discovered the answer. The Public Accounts Committee reported:
	"If the Department for Work and Pensions paid out benefits corresponding to tax credits in the traditional way, they would have to seek Parliamentary approval for over-payments of £500 to £700 million a year. As these tax credit overpayments are netted off against tax collected within the Inland Revenue's accounts they are not subject to the same reporting and accountability to Parliament as voted funds."
	So for these massive sums of money, full parliamentary reporting and scrutiny are not available. More light should have been shed on this very murky issue.
	I am very disappointed that the Chief Secretary is not present to hear the end of the debate. I do not know where he is: he is always very courteous in the House, but it was extraordinary that, like the Chancellor of the Exchequer, he has failed to offer any apology for the grotesque misfortune that has befallen many thousands of the most vulnerable people in the country. The right hon. Gentleman gave a bloodless and technocratic performance.
	The Chief Secretary was very unclear about the statutory test for the recovery of excess payments, which he rejected. To answer his challenge, I can say that the Opposition accept the global amount for the provisions of tax credits, but we need clear answers to many questions. The Chief Secretary did not give them, and I hope that the Paymaster General will take this opportunity to do so.
	The hon. Member for Yeovil (Mr. Laws) said that Ministers were taking a long time to resolve the tax credit problem. He rightly noted that no real action plan exists, and mentioned the exhortations from Citizens Advice. He also talked about error rates and the amount of bureaucracy, and I agree with him that we need very clear answers from the Paymaster General on these matters.

Rob Marris: The hon. Gentleman has cited the hon. Member for Havant (Mr. Willetts), who said that most of all he wanted an end to the ludicrous tax credit system that the Chancellor introduced, which he called a failed idea from the 1970s. Earlier, the hon. Member for Tatton (Mr. Osborne) seemed to cite approvingly a report from the Institute for Fiscal Studies that suggested that the tax credit system had led to more rather than less poverty. Do the Opposition intend to abolish the system or not?

Richard Spring: My hon. Friend the Member for Tatton (Mr. Osborne) made the position very clear. Given the huge bureaucracy and costs of the tax credit system, and the huge suffering that it has caused, we need a full-blown review of its operation. All hon. Members should be committed to that, and I refer the hon. Gentleman to the ombudsman's report in that respect.
	The right hon. Member for Birkenhead (Mr. Field) was right to say that the question is not whether we dislike child poverty or want to deal with it, but how we resolve it. Of course, we are all committed to abolishing child poverty, and the right hon. Gentleman listed three clear reforms that need to be introduced. He asked that the Paymaster General respond to his suggestions, and I hope she will.
	My hon. Friend the Member for South-West Bedfordshire (Andrew Selous) made a very well informed speech. He said that the operation of the system contained imbalances that discriminate against families, and that there was insufficient recognition of that. That is an important point, and it could be part of a review of the whole system.
	It is always refreshing to hear from my right hon. Friend the Member for Charnwood (Mr. Dorrell), who has considerable ministerial experience, and who rightly said that the Chancellor and those closest to him underestimated enormously the policy difficulties involved in a change of this sort, with all the attendant consequences. He asked whether the price was worth paying.
	The hon. Member for Doncaster, North (Edward Miliband) posed five questions. He rightly said that any system that imposes a stigma on people is unacceptable. His questions were listened to with respect, but he must appreciate that the system is failing in a monumental way. It is the responsibility of the Opposition and other hon. Members to hold the Government to account. We have to find a way forward. Although the hon. Gentleman cited the system's objectives, I do not believe that he can be remotely satisfied with the way it is working out in practice.
	My hon. Friend the Member for Wellingborough (Mr. Bone) made an excellent and very practical speech, in which he spoke about the problems that people brought to his surgery. He brought a sense of reality to the debate, and set out the terrible fact that families in this country have no idea what their income is going to be.
	The parliamentary ombudsman has criticised the application of the system, the customer interface and the IT equipment. The Government must take that on board, but they must also recognise that they have been caught between creating chaos and misery on the one hand, and spending vast sums of taxpayers' money on the other.
	I can only echo what was said by my hon. Friend the Member for Tatton and many others. There has to be a proper and comprehensive review of the system, to bring order to the problem and to ensure that it never happens again on any comparable scale. It is reported that the head of the HMRC has said that it would cost £5 billion to revamp the system, and we know that the running costs now total more than £400 million.
	The Atkinson review of Government bureaucracy said that the Government were inefficient and that a different system was needed, but no fewer than 3,200 Revenue staff are trying to underpin the tax credits helpline. The Treasury spin machine told The Times this morning that that was due to a massive increase in take-up. That is utterly wrong: it is due to the massive chaos of the system.
	The Chancellor of the Exchequer is the father of tax credits. He is attending a meeting of ECOFIN, and perhaps he will talk about waste in the EU and about our £3.6 billion rebate. Perhaps he will speak about the lack of transparency in the EU, and about the need to fight oppressive regulation and bureaucracy. However, what would the right hon. Gentleman's credibility be if his fellow Finance Ministers knew that the most recent tax credit overpayments totalled about three quarters of the very rebate he is supposedly so determined to secure? One simply could not write the script.
	Finally, whatever criticism one may make of the Paymaster General, she is the one who has defended the tax credits nightmare, both in this Chamber and in Westminster Hall. She has acknowledged the hardships that it has caused, and even the Prime Minister has apologised, but we have yet to hear a word of remorse from the person with departmental oversight of this bureaucratic nightmare. I leave it to the House to make a judgment on that.

Dawn Primarolo: In the few moments left for my reply to this important debate, I want to try to touch on all the major points that Members have raised. I start by making clear that the debate must be set in context. As the Minister, I fully acknowledge the problems with the introduction of the tax credit system and the IT system. I have been open with the House about the problems caused for some claimants and I would never wish anybody to suggest that I underestimate them. I have listened carefully to the points that have been made about the recommendations by the ombudsman, the adjudicator and the CAB and I shall return to them. I shall explain to the House how I propose to take forward those recommendations.
	Like my hon. Friend the Member for Doncaster, North (Edward Miliband), I want to start by setting the context. I was interested in what the right hon. Member for Charnwood (Mr. Dorrell) said and, if I may, I will paraphrase him. He said that the Conservatives were very concerned about poverty, but they had been unable to do anything about it and it continued remorselessly to rise under their Administration. When people talk about the misery of poverty, they should consider that context: the rise from 1 million to 4 million in the number of children who fell into poverty under his Government.
	The tax credit system assists and supports the poor. It is important to reinforce that point. As my hon. Friend the Member for Doncaster, North suggested, it is a broad-based system. He referred to take-up, and said that tax credits were well targeted and that the system destigmatised claimants and ensured that most families received support. More than 500,000 children have been lifted out of poverty since 1998–99, and 6.1 million families, with 10 million children—not an insignificant number—are benefiting from tax credits. By October 2005, in real terms, families with children in the poorest fifth of the population will, on average, be £3,200 a year better off. Children's risk of poverty has fallen from 33 to 28 per cent., after housing costs, between 1988–89 and 2003–04. Of course, more needs to be done, as the Government's child poverty strategy and the review published last summer clearly indicated. We need to develop that work.
	Members have referred specifically to the administration of the system. My right hon. Friend the Member for Birkenhead (Mr. Field) focused on how the system could be made to work and to respond, in particular, to the needs of the more vulnerable. I understand entirely that he wants a wider debate about whether tax credits really are the way forward. He will understand that as a Minister, I am committed to tax credits but those are perfectly legitimate questions and they need to be asked.
	So, what have I done? On 5 July, I met Citizens Advice and the ombudsman, and today I met the adjudicator. I discussed with all of them their recommendations. I have agreed that there should be a formal response to the ombudsman's recommendations, giving a time frame for their delivery where possible. Most important, I was keen to learn from the experience of all three and to discuss with them how we could maintain contact and ensure that the recommendations are properly taken forward, how we can report back to them and how they can assist us in that process. All three organisations acknowledged the value of the tax credit system, but noted the need to deal with the issues that have been raised.
	With regard to the recommendations made by Citizens Advice, the ombudsman and the adjudicator, recommendation 10 in the ombudsman's report is that there should be a blanket amnesty on overpayments. As I have explained to the House and explained again to those organisations, the Government have a responsibility to balance our duty of care for all claimants with our duty to all taxpayers with regard to the public purse, so we cannot make a blanket decision for all cases where overpayment is vastly out of proportion to the award, and in many cases is not contested. However, we have said that, with that exception, we want to engage with them and to consider all their recommendations and the practicalities of taking them forward. For example, all three organisations made recommendations about award notices. We have been consulting them about the introduction of a new award notice. I have asked that the ombudsman and the adjudicator consider that in the light of the points they made. A draft is available, and I shall be delighted to put it in the Library.
	I can assure the House that I shall work closely with the consultation group, the voluntary sector, the ombudsman and the adjudicator to take that work forward. Many elements in my statement to the House of 26 May preceded the reports, but encompassed many, indeed all of the points, with the exception of the amnesty. That relates to the point made in a slightly different fashion by my right hon. Friend the Member for Birkenhead about the possibilities of what I would describe as playback, whereby the tax credit claimant would receive a playback of all the awards and the changes that had been made through the year, so that they had a clear statement. I have asked that that be taken forward as a matter of urgency.
	The system works for the majority of people, but at every point I try to draw on all the expertise and knowledge of those three organisations and others to improve it, and to deal specifically with the steps that we may need to take for an important group in the tax credit population. For example, I have asked the CAB to engage in discussions with us about how we can develop and enhance its advocacy role, using its expertise especially to reinforce support and advice. I have asked HMRC, in the period of merger, to examine how we can strengthen and ensure access for that particular group in many different ways.

Frank Field: I am grateful to my right hon. Friend for saying whom she will consult on her new statement explaining the tax credit payments, but the group that she has missed out is poor people. Many poor people are very intelligent, and that is how they survive. Might she include some of our constituents when she consults on the design and intelligibility of the form?

Dawn Primarolo: I have no objection to doing so. Indeed, hon. Members who are consulting their constituents and discussing the issue with them have said that they will report to me. We have to have a wider base for consultation, because we must get it right.
	My right hon. Friend also raised the very important question of suspension of recovery in case of dispute. I spoke to the citizens advice bureaux, the ombudsman and the adjudicator on that point. HMRC now tells me that we can introduce a suspension in case of dispute and, until it is resolved, recovery will not continue. I am simply now awaiting a date from HMRC for that procedure.
	With the recovery mechanisms in place, the strategy of tax credits ensures, as my hon. Friend the Member for Doncaster, North (Edward Miliband) said, that we target poverty, remove children from poverty, and support families in balancing their family responsibilities and their work. The tax credits ensure that we share the burden as a community and give more to those who have least, ensuring that everybody gets something and the most goes to the poorest. That is the basis of the tax credits and that is why the policy is right. That is why we need to move now—as hon. Members have said—to ensure that the administrative and IT problems are corrected and the system delivers for all claimants the very best service that we always intended to provide. I commend the tax credit system to the House. We will continue to eradicate child poverty and take forward the principles enshrined in the system.

Question put, That the original words stand part of the Question:—
	The House divided: Ayes 220, Noes 305.

Question accordingly negatived.
	Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
	Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
	Resolved,
	That this House supports the Government's strategy to make work pay and provide financial support to families through tax credits; welcomes the fact that over 6 million families and 10.5 million children are benefiting from tax credits, with first year take-up of around 80 per cent., compared to just 57 per cent. for the Family Credit system inherited by the Government; recognises that far more families than ever before are benefiting from help with childcare costs; notes that tax credits are central to the Government's goal of abolishing child poverty; further notes that tax credits have helped ensure there are 1.5 million fewer children in poverty and have helped 275,000 lone parents into work; recognises the need to balance the demands for a simple system with the need for a system that responds to people's changing circumstances, giving most help to families when they need it most; acknowledges the IT and administrative problems that accompanied the early stages of implementation; and welcomes the measures announced by the Government for improving the administration of the system.

Licensing Act 2003

Mr. Deputy Speaker: I inform the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

Theresa May: I beg to move,
	That this House notes with concern that with only 25 days to go before the 6th August deadline set in the Licensing Act 2003, only 20 per cent. of licence applications have been received; further notes the chaos that this is creating both for the licensing trade and for local authorities; is concerned by the problems of extra cost that the legislation is creating for village halls, sports clubs and community centres; regrets the effect that this will have upon local communities; condemns the Government for its lack of action in dealing with the problem; and calls upon the Government to extend the deadlines for the receipt of applications and re-examine the impact upon village halls and sports clubs.
	I do not think that the Government will be surprised that we have tabled this motion. We have raised the issue in departmental questions, tabled early-day motions and debated the matter in Westminster Hall. Moreover, the Conservative party opposed the Bill when it was first debated in the House, and we did so because we thought that it was ill thought out and badly targeted, that it failed to address the real problems and that it would be impossible to implement. I pay tribute to the work done by my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss), who, during the passage of the Bill, consistently pointed out to the Government the practical problems that they would face with this badly drafted and ill-thought-out legislation. I hate to say this to the Minister, but "We told you so".
	At every stage of the implementation of the Licensing Act 2003, we have attempted to make constructive and positive suggestions about how it could be delivered. We have raised concerns from the brewing industry, village halls, voluntary groups, musicians and sporting clubs. At every stage, sadly, the Government have ignored our pleas, denied that there was a problem and buried their head in the sand. Their response has been—to paraphrase a former Prime Minister—crisis, what crisis?

Jonathan R Shaw: The right hon. Lady sets out what she describes as chaos. Does she agree with the leader of Westminster city council, who said:
	"The Licensing Act brings enormous potential to consolidate Westminster's position as a premier evening and late-night destination."?
	What has she got to say to that?

Theresa May: It has come to a pretty pass when a Labour Member has to quote a first-rate Conservative council to try to defend the Government on such a matter.

Meg Hillier: Will the right hon. Lady give way?

Theresa May: I shall make just a little more progress before giving way.
	We can talk to all sorts of bodies—the licensing trade, Action with Communities in Rural England, the Musicians Union, the Central Council of Physical Recreation, which is dear to the heart of the Minister for Sport and Tourism, or the Local Government Association—and they will all tell us that the Government are presiding over the biggest chaos in implementation since the last big chaos in Government implementation. Indeed, I was at a dinner in Harrogate only last Tuesday—a mere week ago—when the leader of Westminster city council made a key point in telling me and the others there that it was high time that the Government listened to the issues that were being raised by local authorities about the problems of implementing the Act.

Rob Marris: Will the right hon. Lady give way?

Theresa May: I shall give way to the hon. Member for Hackney, South and Shoreditch (Meg Hillier) first.

Meg Hillier: Would the right hon. Lady like to visit my constituency, where the local authority in Hackney has done an excellent job in working with the community and local people to bring in locally controlled licensing hours? Local people are delighted that they can go to their elected representatives to tackle problems, rather than experiencing the chaos that we had before.

Theresa May: I am always very happy to visit Hackney and talk to people about the implications of what the Government are doing in the hon. Lady's constituency. I suggest that she visits other constituencies throughout the country in which village halls and many publicans are experiencing chaos and local authorities face the prospect of having to deal with large numbers of licence applications in the next couple of weeks.

Peter Luff: For the third time in her speech, my right hon. Friend has correctly cited a list of organisations that are deeply and seriously affected by the Act as implemented. I have a sheaf of letters from village halls and parish councils in my constituency that endorse everything that she said—[Interruption.] I shall happily take the Minister for Sport and Tourism through the letters one by one if he doubts me, because he would be shocked by what he found in them. Can my right hon. Friend assure me—[Interruption.]

Mr. Deputy Speaker: Order. It would help if we did not have interventions from a sedentary position.

Peter Luff: I am grateful, Mr. Deputy Speaker. Can my right hon. Friend the Member for Maidenhead (Mrs. May) assure me that the omission of travelling circuses from her litany is simply an oversight and that she understands the serious impact that the Act is having on them?

Theresa May: I can certainly assure my hon. Friend of that fact. Indeed, I have so far failed to mention farmers' markets, take-away food stores, off-licences and corner shops, all of which are deeply affected by the Act. He mentions the sheaf of letters that he has received from his constituents. My hon. Friends have sent me copies of the correspondence that they have received from village halls, sports clubs and other organisations in their constituencies, all of which are complaints about the implications of the Act.

David Heath: Will the right hon. Lady give way.

Theresa May: The hon. Member for Wolverhampton, South-West (Rob Marris) asked first.

Rob Marris: The right hon. Lady might not know that the third largest pub chain in the United Kingdom is headquartered in my constituency and run by the excellent Wolverhampton and Dudley breweries. I spent last Wednesday evening at a dinner in the company of some of its representatives, and although they said that there were some teething problems, they were entirely happy with the Licensing Act 2003, as far as I could gather. The industry is certainly not entirely against the legislation.

Theresa May: The whole point is that the big chains have the personnel, resources and funding to provide support to their pubs. The hon. Gentleman should perhaps talk to smaller brewery chains such as Brakspear, which is an excellent local brewery in Henley. Only last week I met a representative of the company who told me about the real problems that its pubs are having in dealing with the extra cost and additional bureaucracy and time involved in the licence applications.

David Heath: Just so that the right hon. Lady's list becomes ever longer, another group of voluntary organisations that is deeply affected by the Act is the carnival circuit in Somerset. She might not know that that massive affair attracts up to 150,000 people a night, but it could be decimated as a result of the Act.

Theresa May: The hon. Gentleman makes an extremely valid point. The Government have completely failed to understand the number of organisations and activities that are affected by the Act and will find matters involving licensing applications rather more difficult than they did in the past.
	I am not sure what I find most galling: the inability and incompetence of the Government, or the arrogance of Ministers about the matter. During Culture, Media and Sport questions yesterday, the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Stalybridge and Hyde (James Purnell), told us that 33 per cent. of expected applications had been received. He said:
	"Applications are starting to pick up, although there is still some way to go."—[Official Report, 11 July 2005; Vol. 436, c. 555.]
	With 25 days to go, for 190,000 premises—I am setting apart personal licences—an outstanding total of 133,000 applications are yet to be made. As a result of the Government's deadline of 6 August, local authorities will have 18 working days in which they will be expected to receive and process applications, so they will have to deal with 7,400 a day. That shows the chaos out there at the moment. Why do not the Government just admit that they got things wrong and work with us to come up with a solution?

Don Foster: Will the right hon. Lady also acknowledge that in addition to the many licence applications that are still to come forward, there will be a large number of appeals? Does she think that the magistrates courts will be in a position to deal with them, let alone that the local authorities will be able to deal with the licence applications?

Theresa May: Indeed; the hon. Gentleman makes a valid point. There are three stages to the problem. Local authority officers must first deal with processing. Then local authority councillor panels might have to meet many times a week over the rest of this month to deal with applications. There could then be a problem for the magistrates courts, which was raised with me when I visited my local magistrates court in Maidenhead a couple of weeks ago. People are worried about what they must do to ensure that the Act is properly implemented.
	In a sense, I feel sorry for the Under-Secretary. This was a disaster waiting to happen and it has just been dropped in his lap. Even the Financial Times has documented his annoyance at dealing with the ensuing chaos and the fact that he is becoming fed up with "these ridiculous photo opportunities" that have seen him pictured in every catering magazine from Fast Food & Frying Operator to Masala. I am sure that they are worthy and well-read publications, but even if the Under-Secretary were to appear as the centre spread in Vogue, OK! or The Guardian's media pages, he still could not meet his 6 August deadline for the applications.

James Purnell: I am grateful to the right hon. Lady for the opportunity to clarify the fact that I was absolutely delighted to give interviews and participate in all those photo opportunities. Although the FT is a very august and respectable paper, for once it got the emphasis slightly wrong.

Theresa May: Oh dear, the damage is done. I am afraid that I cited a direct quote from the Under-Secretary.
	Of course we accept that applicants, especially commercial businesses, should pay the cost of their licensing applications. However, running such a burdensome, bureaucratic and unnecessarily complex system is introducing additional costs that the industry, let alone voluntary organisations, simply cannot afford to bear.

Angela Smith: The Tories have flip-flopped constantly on the Act. They cannot decide whether they want it to be more regulatory or deregulatory. Perhaps the right hon. Lady will clarify their position.

Theresa May: I want the Act to be fair to all pubs, clubs, voluntary organisations, village halls and sports clubs throughout the country, although some are now faced with possible closure as a result of the Government's actions.
	The Under-Secretary tells us that the new system is not bureaucratic at all. He tells us that filling in the new forms is simply a matter of ticking a few boxes. He said:
	"It's much simpler than filling in a tax form".
	Well, I do not know what sort of tax form he fills in. I took the opportunity to download an application form from the Department's website. It is indeed just a matter of a few boxes—97 of them, in fact. Those are just the boxes to be ticked, because another 508 boxes require further information. More than 600 boxes must be completed, yet the Under-Secretary says that the form is simpler than the two pages of application that people had to complete in the past.

James Purnell: To tick all those boxes, an organisation would have to be a venue with a dance floor that would serve alcohol and late food, in addition to putting on dance, showing films and putting on a wrestling match, indoor sports and plays. If an organisation is just converting, the application form is only seven pages, not 21 pages with 500 boxes, as the right hon. Lady suggests.

Theresa May: rose—

Barbara Keeley: Will the right hon. Lady give way?

Theresa May: I shall respond to the Minister's point first.
	The application form is not just seven pages, because the form entitled "Application for an existing licence to be converted to a premises licence" is for a conversion application and it is 27 pages long, including the guidance notes. It is all very well for the Minister to say that people do not have to complete every box. They may not wish to apply for everything, but they have to read the form and decide whether to complete it. The point is the time that it takes to fill it in.

Barbara Keeley: On effort, I commend to the right hon. Lady one of my two local authorities, Salford, which has got around the problems that she raises by doing the simple things that a local authority should do in such circumstances. It has run workshops, given advice and sent out letters to prompt applications. That is not difficult. [Hon. Members: "It is."] It is not. The key point is to bring local authorities and communities into a dialogue on licences. Talking to—

Mr. Deputy Speaker: Order. The hon. Lady must ask a question when she intervenes. I think that for now she has probably said enough.

Theresa May: I accept that some local authorities are running workshops. That is a good idea and is helpful, but if someone is a volunteer running a small village hall committee, he still has to find the time to attend those workshops and to fill in the form, regardless of whether he has been to a local authority workshop or not.
	Far from communities having a greater say in what is happening in their area, a publican told me the other day that the village where her pub is located is concerned because the application form, which goes up in the pub's window, has to contain the full hours for which she is applying for a licence. As she wants the opportunity to have an extended licence for new year and sometimes to have people in to watch the rugby in the morning, she has applied for a licence from 8 am to 1 or 2 am. Far from feeling that they are being consulted, local villagers are saying, "What's this? Why is the pub going to be open every day from 8 am to 2 am?" It is not, but the way in which the Government have drafted the legislation is causing all those worries.
	The system has become so bureaucratic that it is a lawyer's licence to print money. Hon. Members should not take my word for it: ask a lawyer—everyone else has to in order to fill in the forms. Peter Lockley of Blythe Liggins solicitors in Leamington Spa says:
	"The Government could not have produced a more complicated form had it tried. Even seasoned lawyers and experienced licensees are on the whole totally confused."
	For once, that piece of legal advice is free.
	Alternatively, the Minister could ask someone who has completed one of the forms. John Moore of Ashfield Peace memorial hall writes:
	"I have personally devoted at least two man weeks to understanding the requirements, attended a training evening and had two meetings with the licensing authority at Mole Valley. I have purchased two HMSO publications on the Regulations and the interpretation costing £24. I have read 30 pages of accompanying notes. I have completed a form 21 pages long, each page seriously complicated and detailed, compared with 2 simple pages previously. We have had to prepare a plan of the hall to scale 1:100 done by volunteers but costing us £120 for computer software to run it. We have by law to advertise our change of licence at a cost of £292".
	That is the process that people have to go through to apply for the licences.

Alistair Burt: "Simple"—the Minister has no idea.

Theresa May: Indeed, simple is how the Minister describes it. He has no idea what people face.
	Let me draw the Minister's attention to the e-mail that I received from the chairman of the Pinder hall committee in Cookham in my constituency—Pinder hall is the village hall. She says:
	"Our Social Club has thrown in the towel and is going to a solicitor, as they feel the forms are so complicated. The Sailing Club"—
	Cookham Reach sailing club—
	"have discovered the cost is more than they bring in in fees and we at the Pinder Hall believe we will have to pay well over £1,000 for just eighteen events a year. The Cricket Club say no one told them about it . . . The whole thing is a total fiasco".
	That is the point. If even trained professionals like that lawyer are struggling to cope with the system, how on earth are volunteers supposed to cope? The complex nature of the regime is putting at risk the future of our sports clubs and village halls.
	The Minister has made a number of statements about the new regime. He has said that it simplifies matters and makes it cheaper for organisations in the long run, and that once completed, organisations will never have to apply again. Indeed, on the "You and Yours" programme on BBC Radio 4 two weeks ago, he said:
	"The light at the end of tunnel is that they can know that they will never have to apply for a licence again".
	My version of never having to apply again is clearly not the same as Ministers'. My "never having to apply" means exactly that. The reality is, however, that organisations will have to renew their licence every year at the cost of between £40 and £225. [Interruption.] Ah! The Minister says that they will not have to fill in the same form. What he said on the Radio 4 programme was:
	"they will never have to apply for a licence again",
	yet they will, because every year they have to apply to renew their licence.
	When is a licence for life not a licence for life? I suggest that it is when it is issued by this Minister. His one-off licence looks a little dodgy to me. Perhaps he has become the Del Boy Trotter of the licensing trade: "Lifetime guarantees but don't expect your money back."
	I have other examples of people who face the reality of filling in the forms. Bob Hulley, the secretary of Sonning working men's club, says:
	"Hitherto, Clubs have had to apply to a Magistrate's Court for a Club Registration Certificate. This cost is £10, and lasted for ten years. Under the new Act, we have had to pay £250 to apply . . . £230 to advertise our application, and starting next year there is an annual fee of £180. We are constituted on a 'not for profit basis', and exist to serve as a focus and meeting place for the local community. If we finish a financial year and all bills paid and a surplus of only a few hundred pounds in hand, we feel we have done quite well.
	We are looking at ways to increase income, such as increasing our membership fees, but we have to recognise that many of our members are pensioners, who are living close to the financial edge themselves."
	Sonning working men's club
	"has served the community in Sonning for over 100 years. We will do our utmost to keep going, but I have to describe our future as uncomfortable to uncertain."

Meg Hillier: Will the right hon. Lady give way?

Theresa May: No. I want to make progress.
	That is the reality of what is happening as a result of the Act. When the Minister says that it will not affect community groups, perhaps he has not heard of organisations like Sonning working men's club or the Italian Circle in Welwyn Garden City. The committee of the Italian Circle has written to us. It was established a few years ago to provide talks about Italian subjects to members and visitors. It has slide shows, videos and so forth, and offers members and visitors the opportunity to have a glass of wine. The consumption of wine averages four to five bottles a meeting, yet it has been informed that it has to make an application under the Act for temporary event notices. According to the chairman, however, the way in which the Act is drafted has presented it
	"with severe problems, which may result in the closure of the Circle."
	The Government have failed to grasp the way in which this ill-thought-out and heavy-handed law is impacting not just on community groups, village halls and working men's clubs, but on small businesses. I have a letter from Wines Unlimited in Worcester Park, which says:
	"We are a small wholesale wine business, selling by the case, which my husband set up when he retired as a hobby. Under the old regulation we did not need a licence to trade as a wholesaler. Under the new regulation we have to have a premises licence for our storeroom, a Personal licence, pay Band D Charges council tax and many more regulations, which of course all cost money. Our profit margin is very small and therefore would not stand this kind of expense. So we can only go out of business."
	It goes on to say:
	"The Legislation has not been thought through properly. We have to spend between £100.00 and £300.00 on a course to teach us NOT about wine or how to serve the community"
	but
	"to teach us how to throw someone out of a bar! (which we do not have and have no intention of having)".
	That is how ill-thought-out this particular piece of legislation is.
	At Prime Minister's questions three weeks ago, the Prime Minister, on the issue of village halls, gave an undertaking. He said:
	"I do understand the hon. Gentleman's concerns. We tried to introduce a licensing regime that puts more power in the hands of local people. I understand the problems of village halls—I have heard about them myself—and we look further into them to see if anything can be done. Obviously, in the end, we need a licensing regime that pays its way."—[Official Report, 22 June 2005; Vol. 435, c. 798.]
	Perhaps the Minister can tell us what can be done or what he intends to do as a result of the Prime Minister's commitment to the House that this matter would be looked into. What will the Minister be doing for Richard Slater of the Village Halls Advisory Service, who says that the new Act seems very unfair. He adds:
	"For halls to be limited to 12 temporary event notices means that small money-raising activities for, say, a playgroup holding a cheese and wine event will either be driven to private houses for a few or penalise an essential facility in a village."
	That is the problem. Community activities will cease as a result of what the Government have been doing.
	There are further complications. I have seen a letter from Mr. Barclay, the honorary treasurer of Roydon village hall.

Angela Smith: I thank the right hon. Lady for giving way for a second time.
	The right hon. Lady has talked much about chaos, disorder and complication. However, she would deprive the police, local authorities and local residents of important new powers to deal with problems created by alcohol-fuelled disorder and violence. Does she have an alternative for dealing with such problems? Does she agree that the problems exist?

Theresa May: I suggest that the hon. Lady thinks seriously before making such an intervention. When have there been problems of social disorder in village halls as a result of cheese-and-wine fundraising events for play groups? There have not been any. The Government have used an Act that introduced various other facilities as a sledgehammer to crack a nut in relation to village halls and sports clubs.
	There are other complications. The honorary treasurer of Roydon village hall has said that before it can have a designated premises supervisor it must undergo a Criminal Records Bureau check. He added:
	"We have been informed that this check cannot be carried out in England because the organisation to process these checks has not been put in place, and the current information supplied by the English Criminal Records Bureau does not meet the requirements of the new legislation. Therefore the application has to be processed in Scotland. We have four members on the Committee, who have undergone enhanced CRB checks in England, but this check is insufficient for the new regime, and they will need to undergo these checks again if they would wish to be designated premises supervisors."
	I have merely touched the surface in my remarks about what is a bad piece of legislation. Sadly, there is little time left for us to make it better. If the Minister had decided to work with us when we first raised these issues, he would have extended the deadlines, and we would have given him our support. However, we are now faced with just a few working days in the House, and no chance of bringing forward primary legislation to extend the 6 August deadline. Will the Minister at the very least now accept the mess that he has created and that he now finds himself in and work with us to find a solution for the many organisations that are struggling with the implementation of the Act?
	The Minister has not yet laid the statutory instrument setting the second deadline of 24 November. Will he agree to extend that deadline, at least until after the Christmas and new year period, so that seasonal trade and the enjoyment of the public are not interrupted?
	The Minister has set up the licensing fees review panel—I repeat the questions that I put to the Minister for Sport and Tourism yesterday, which he singularly failed to answer or even attempt to address in his responses—which will not report until autumn 2006. Will he now bring forward the review, tell it to report by the November deadline this year and agree to backdate any proposed reduction in fees, particularly to sports clubs and village halls? Will he agree also to review the way in which charges are apportioned to clubs, particularly sports clubs, so that they are based on the rateable value of only the area that is serving alcohol, rather than the club premises and grounds as a whole? Will he review the preposterous issue of temporary events notices, and increase them from 12 to at least to 24, and preferably to an even higher number?
	We are discussing the implications that this bad Act will have for the licensing regime. I have not mentioned many other organisations and businesses that are affected by the legislation, such as travelling circuses. The hon. Member for Bath (Mr. Foster) mentioned carnivals. There are also farmers' markets, fast food outlets and corner shops, some of which are finding things very difficult and may go under. All of those organisations, businesses and community activities are being affected by the Act.

Barbara Keeley: Will the right hon. Lady give way?

Theresa May: No, I am coming to a conclusion.
	The Minister should now face the truth and accept the reality of what is happening. He need not accept my word, but he should accept the word of village halls, community centres, clubs and sports clubs throughout the country. He must face the truth, accept the chaos that the Act is causing and do something about it now.

James Purnell: I beg to move, To leave out from "House" to end of the Question, and to add instead thereof:
	"commends the Government on its effective publicity campaign that has significantly increased the rate of applications to convert existing licences under the Licensing Act 2003 before 6th August; encourages remaining licensees to fulfil their responsibilities and get their applications in before that date; considers that failure to implement the Act without delay would deny local communities increased powers of intervention and improved democratic accountability with regard to licensing and deny the police the expanded powers that are vital to their efforts to tackle alcohol-related crime and anti-social behaviour; welcomes the powers in the Act to prevent crime and disorder and public nuisance, and protect children from harm; believes that the Act will benefit local communities, local economies and tourism and generate savings for business of almost £2 billion over 10 years; and furthermore, believes that the Act will be successfully implemented by 24th November 2005 and will be welcomed by industry and non-commercial organisations, including village halls and sports clubs, alike.".
	My right hon. Friend the Secretary of State regrets that she cannot be here for this important debate. As the House will be aware, she has been asked to take on a role working with the families of the victims of last week. I think that it will be understood why she is not able to be in the Chamber.
	I listened carefully to the right hon. Member for Maidenhead (Mrs. May). After 28 minutes of her speech, I am still not clear whether she is in favour of more flexible hours or against them. There was no mention of her view on that or of the alternative policy that she was putting forward. We have some sympathy with her in that her quandary is really her predecessor's fault. As has been said, the Tories have flip-flopped all over the place on the Licensing Act 2003. They started by being in favour. When the Bill was passing through the House, the right hon. Lady's predecessor said that the Conservatives agreed with the need for greater flexibility on opening hours, and that they accepted the argument for doing away with universal chucking-out time. Then, just before the election, when the political editor of the Daily Mail telephoned and said that it was launching a campaign against 24-hour drinking, the Tories decided that they were wrong after all, that they would come into line with the Daily Mail and would oppose the extension of the opening hours that they had supported in the first place.
	Today, the problem for the right hon. Lady is that she cannot say what she thinks about flexible hours. I suspect that she agrees with them, but she cannot say so because in another part of the forest the shadow Home Secretary is still busily campaigning against 24-hour drinking, even though no one has applied for 24-hour licences.

Edward Vaizey: As we are experiencing the parliamentary equivalent of a lock-in, as I gather from the screens, perhaps it is time to make many interventions. The key point that the Minister must understand is that we are not debating the flexibility of the Act, but the inflexibility of the Act—the one-size-fits-all approach has penalised village halls. Will the Minister reconsider this regime and how it affects village halls, which are staffed by volunteers and do not have the resources to have a designated premises supervisor and do not need licensing training?

James Purnell: I am happy to consider that. I am also happy to meet the hon. Gentleman and other colleagues if that is their wish.
	The right hon. Member for Maidenhead has no alternative but to focus purely on the implementation of the Act. She does not have a position on the overall intent of the Act.

Jonathan R Shaw: As well as 24-hour drinking, on which we have not heard from the right hon. Lady for Maidenhead (Mrs. May), she also failed to mention the president of the National Association of Kebab Shops, who thinks that the Bill is top dollar. He has said:
	"We are happy with this law because the longer opening hours will be available to most take-away shops."
	There we are. Put chilli sauce on that.

James Purnell: I look forward to my hon. Friend's press release and seeing him pictured in one of his local kebab shops.
	The truth is that the Tory party has sacrificed long-term credibility for the prospect of winning the support of an agreed section of the population, or even the possibility of winning votes in the House. That is what the shadow Chancellor said when he was explaining why the Conservative party did so badly at the last general election. It seems from the speech of the right hon. Member for Maidenhead that not much has changed. We are left only with criticism and no positive alternatives.
	The truth is that the legislation that we are discussing is long overdue.

Theresa May: I set out a number of positive alternatives in my closing remarks. I offered suggestions to the Minister on ways in which the Government could get out of the mess into which they have got themselves.

James Purnell: We still do not know what the right hon. Lady's views are on flexible hours. Through the Act—[Interruption.] The core of the Act is about flexible hours and still, after years of scrutiny, we have no idea of what Tory policy is on the issue.

Alistair Burt: The Minister is a bright chap. We are not dealing with a motion that condemns the entire Act in all its aspects. The point of the motion and that of the speech of my right hon. Friend the Member for Maidenhead (Mrs. May) was to pinpoint the failure of the Act and the possibility of repairing the damage that is being done to certain of the community because of that Act. If the Minister would get off 24-hour drinking and spend 20 minutes answering the questions perhaps we would have a better debate.

James Purnell: That is exactly what I am going to do. If the hon. Gentleman supports the Licensing Act, presumably he is against the shadow Home Secretary, who is busy campaigning against it. That is the problem for the Opposition—they have taken two totally different positions and have contradicted themselves so they now find themselves in the position where they do not have a position.

David Heath: I want to make a positive suggestion. The Minister knows that I am interested in the problem relating to carnivals, which is an unintended consequence of the Bill. Traditional carnivals in Somerset include moving floats, which are exempt, and people walking along, who are not exempt. Would he consider using a definition from the Town Police Clauses Act 1847? It is an old Act, but every carnival uses it to secure road closures. It refers to
	"all times of public processions, rejoicings or illuminations, and in any case when the streets . . . may be thronged or liable to be obstructed".
	Although that definition is 150 years old, it would get round the difficulty for carnivals. Would the Minister look at it and see whether he can send a letter of comfort to district councils so that they know how to administer the law?

James Purnell: I am happy to look at that, although my understanding is that, perhaps partly thanks to the hon. Gentleman's assiduous campaigning in Parliament, Somerset councils have now decided that their existing carnivals do not include licensable activities. New events, however, may need to be considered on a case-by-case basis.

David Heath: Yes, the councils have made that decision this year, but it is open to challenge from anyone who believes that a carnival needs to be licensed. The law is imprecise, and the carnival organisers are worried that they could be liable to six months' imprisonment or a fine of £20,000 if they are found to be in breach of licence requirements. That is why we need Government reassurance that their interpretation is right.

James Purnell: I am happy to see if we can write a letter that provides comfort. The core of the Bill is about giving local authorities the power to make those decisions locally, so we would not want to override their ability to take those decisions.

Peter Luff: When the Minister debated this matter with me some weeks ago in Westminster Hall, he was in a constructive mood. When I met him to discuss touring circuses only a few weeks he was in a constructive mood again. I am glad that he is returning to a constructive mood now and engaging with the real issues, but when will I receive the letters that he promised me on designated persons for village halls and on the impact on touring circuses? Village halls and circuses cannot wait much longer for that clarification, which he promised some time ago.

James Purnell: We were looking at that in the Department only today. We are trying to secure the final piece of legal advice that we need to send the letter, but we shall do so as soon as possible.
	Thanks to the Act, we can finally look forward to longer pub opening hours, which will boost tourism and help to stamp out binge drinking through a more relaxed and responsible approach to the enjoyment of alcohol. The current laws are based on laws introduced during the first world war and have no place in today's society. That is the view of the Campaign for Real Ale, which is right. The current law is full of anomalies. The "two in a bar" rule, for example means that the White Stripes,—as the House knows, one of the most successful bands in the world but which has only two members—could turn up in a local pub and put on a concert for thousands of people. Our very own MP4—a band with growing support in all our constituencies—would not be able to perform unless the pub had obtained a special licence for them. The band has a slightly smaller fan base than the White Stripes. [Interruption.] At the moment—perhaps one day it will be headlining at Glastonbury. [Interruption.] Unfortunately, I wrote it.
	Uniquely in Europe, we have an 11 pm closing time, which means that people neck two or three pints before being thrown out on the streets at the same time, fighting for a taxi and sometimes even fighting one another. There is a loophole in a law that allows people to sell alcohol after 11 pm, as long as they serve food and provide music and dancing. That means that the one group of people to whom we allow alcohol to be served after 11 pm are those whom our constituents are most worried will be a source of nuisance. The regime clearly needs to be updated, and Members on both sides of the House will agree that the change in the law is overdue.
	The greater flexibility that we are introducing will save the industry money. At the moment, any pub that wants to stay open late, to open early on Christmas eve or to show the Lions test, must go to a magistrate to secure special permission at a cost of £10 a time. There are about 1.7 million such applications a year. The Licensing Act will sweep away anomalies as well as the need for people to go to a magistrate every time that they wish to apply for a special permission. It replaces that requirement with a system in which people apply for a licence once without further need for form filling. The right hon. Member for Maidenhead was stretching the point when she said that because people have to send off a cheque they are making an application. We have front-loaded the application process—people apply up front, then they need never apply again for a premises licence.

Meg Hillier: My hon. Friend mentioned magistrates. Hackney council welcomes the Government's resolve to stick with the 6 August deadline, but would like to know whether applications referred to magistrates on appeal after automatic refusal could be fast-tracked back to the local authority for redetermination. Given the likely last-minute rush, that would make the scheme more workable.

James Purnell: My hon. Friend makes a good point. We need to work with magistrates to ensure that if the application is for a conversion and there has been no objection, it should be possible, if it is not processed within two months, to fast-track it through the magistrates courts. I do not know whether we can take up the point that my hon. Friend made in relation to conversions, but I shall certainly look at it and write to her.
	As I said, the new Act sweeps away anomalies and ends the need for people to go to the magistrate every time that they want to put on an event. Consequently, the amount of forms processed will be greatly reduced from 16 million a year to 2 million per year. The number of hearings will go down from 2.4 million a year to 80,000. There will be great savings of about £1.5 billion in lawyers' fees, so it is not surprising that the lawyer whom the right hon. Member for Maidenhead cited was not happy.

Theresa May: I am grateful for the generosity of the Minister in giving way once more. On the reapplication for licences, will he confirm that it is not the case that once a licence has been granted it is there for life? Will he confirm that it is not a lifetime licence for which nothing else has to be done? Will he confirm that an application has to be made every year to renew the licence? If he is saying that all that someone has to do is sign a cheque, put it in an envelope and post it, is he guaranteeing that local authorities will not require any paperwork other than the cheque?

James Purnell: There is no renewal process. Licensees send in a cheque to fund inspection and enforcement, but no other action is required of them or the licensing authority.
	In the next 10 years, the Act will save the industry about £2 billion. I accept that there is an up-front cost, which we do not seek to minimise—it was included in our calculations for the £2 billion. As the industry asked us, we front-loaded the application process so that licensees do not need to return every time that they wish to put on an event. The current law is inflexible and archaic, and it fails to deal with concerns that we share with our constituents about antisocial behaviour. The only sanction that we have against a pub that is causing problems is closure. Magistrates are naturally reluctant to use that, because it is the nuclear option. Only 0.2 per cent of pubs failed to secure a licence renewal last year.

Andrew Gwynne: I am not sure whether I am required to declare an interest, as my wife holds a highly distinguished position as a member of Tameside council's liquor licensing panel, and my agent chairs it. Is my hon. Friend aware that in Tameside, a local authority that also covers his constituency, the liquor licensing panel refused the first two applications under the new Act because the applicants both had convictions for selling alcohol to children? Is that not a prime example of the way in which the Act, which has given real powers back to local authorities and local communities, is working?

James Purnell: That is an extremely good point, and it shows the powers that local authorities will have under the Act. Previously, they found it difficult to exercise such powers, because they were removed from local accountability. I pay tribute to my hon. Friend's wife and agent, who are leading the efforts of one of the best councils in the country—it is also my council—to introduce the law.
	Instead of the present situation, where there is only the nuclear option of closure, the Act will give us a full range of powers to cope with the problems that a minority of pubs and other licensees can cause. For the first time there is a power for the local community to ask for a review of a licensee who they are worried about. The local authority can then intervene in a targeted way, by imposing new conditions. It can ask for new doormen to be put in, for the management to be changed or for a TV screen to be moved if too many people watching sporting events are causing trouble. If targeted early intervention fails, the local authority can hit the licensee where it hurts—in their pocket. It can suspend the licence and, if necessary, revoke it. If the worst comes to the worst, the fines have been increased in the Act and the maximum fine is now £20,000, possibly with six months in prison.
	We now have a full range of powers to deal with our constituents' concerns about antisocial behaviour. I was therefore surprised to see that the Liberal Democrat motion suggested delaying the implementation of the Act until binge drinking has been addressed. The whole point is that the Act is designed to help us address binge drinking and to give us much better tools to deal with it and much better ways to tackle the problems caused by a small minority of premises. That is why the police are pressing us to bring in the Act as soon as possible. For once, perhaps, the Liberal Democrats are barking up the wrong tree. The Act is a good piece of legislation.

Don Foster: I am grateful for the Minister's comments, and I will respond shortly. Can he tell us which police are urging the Government to push ahead as rapidly as possible with implementation?

James Purnell: The Association of Chief Police Officers, which was represented on our high-level group. The Act is also supported by the Police Superintendents Association. I admit that there are individual police officers who do not support the Act, but the bodies representing the police have supported us.

Barbara Keeley: On antisocial behaviour, the right hon. Member for Maidenhead (Mrs. May) spoke about corner shops. The sale of alcohol by corner shops to young people is a serious issue. There are other licensing issues, but that is a serious one in many constituencies. The idea that such a business could not fill in forms and renew them annually is ridiculous. Does my hon. Friend agree that it is high time the measure came in? Control of the sale of alcohol to young people in my constituency is a serious matter and I would welcome the implementation of the Act without delay.

James Purnell: My hon. Friend is right. I know she has campaigned on the issue, and in response to her and other hon. Members who were worried, as I am, about the sale of alcohol to under-age drinkers, we have brought in the powers to deal with it. We have increased the fine from £1,000 to £5,000, we are introducing fixed penalty notices to deal with people who sell persistently to under-age drinkers, and the Violent Crime Reduction Bill will allow us to close down instantly and for 48 hours businesses which are doing that. We need to change the culture in this country, where some people think it is acceptable for children of nine, 10 or 11 to be drinking alcohol and to be drunk on our streets at 11 o'clock on a Friday night.

Jonathan R Shaw: My hon. Friend referred to the Violent Crime Reduction Bill. Is it not the case that there are powers in that Bill which will ensure that premises have to pay towards some local services if they do not co-operate with local councils, police and so on?

James Purnell: My hon. Friend is right. The idea is that if a local community and a set of licensees fail to deal with concerns about alcohol over time, there will be a charge on them. We see that as a red card, to encourage them to act before that becomes necessary. The power is available to deal with the worst problems.
	Implementing a new piece of legislation is always challenging, and it is not surprising that in a situation where there are about 190,000 licensees and where we are collapsing six regimes into one and dealing with a sector that was previously regulated by up to 50 pieces of legislation, there will be some sectors and individual licensees that suffer anomalies. We will examine those if they occur. We have worked closely with representatives of all the organisations that were cited by the right hon. Lady and other hon. Members, and we will continue to do so.
	The right hon. Lady cited the issue of applications. She carried out a helpful survey in May to see how many licensees had applied. At that stage the rate was too slow. She found that the figure was 3.5 per cent. We therefore decided to increase our awareness-raising efforts and put in place a national campaign. We placed adverts in 28 regional and trade publications. We have done several regional tours and 50 interviews. The right hon. Lady was kind enough to mention some of them.
	We are particularly grateful for the help that we received from brewers—for example, Cobra, which helped us to reach the 8,000 Indian restaurants that they supply with beer. We are also grateful to the cash and carry network, 95 per cent. of which has participated in our initiative and helped us to distribute over 200,000 leaflets to make sure that we can reach people who do not read the trade press and who do not necessarily join trade membership organisations. We can make sure that they are reached as well and that they know they need to apply.
	We do not want to minimise the work that remains to be done, but applications have started to pick up. They were at 3.5 per cent. in mid-May, 10 per cent. by mid-June, 25 per cent. last week and they are now up to 33 per cent., so steady progress is being made. We recognise that there is much further to go, but there is other encouraging news, such as the fact that the British Beer and Pub Association reported this week that about 60 per cent. of pubs have now applied. If that rate of increase in applications continues, a very significant number of those that need a licence to trade will have applied by the first deadline of 6 August.
	If licensees miss that deadline, they have not entirely missed their chance to apply. They will be able to apply as if they were a new licensee. That will be potentially a more difficult process because there would rightly be an opportunity for the local community to make representations. The key message that we should send out today is that they need to apply by 6 August and if they miss that deadline, they need to apply by 24 November.

Don Foster: The Minister needs to check his own legislation. Saying that licensees must apply by 24 November is a load of nonsense. Applications must be received far earlier than that, because time must be allowed for a potential appeal and the setting up of a magistrates Bench to hear it. There must be time for the application to be consulted upon and notice given, and time must be allowed for the local authority officers and then a committee to consider it. What is the Minister's estimate of the date by which an application needs to be made if it is to go through all the potential hoops by the second named day, 24 November?

James Purnell: I am grateful to the hon. Gentleman. I mis-spoke. I meant to say that licensees had to have their application in by 24 November. We would encourage people to get their application in as quickly as possible if they fail to meet the 6 August deadline.
	I want to make it clear that we have no intention of delaying that 24 November deadline. We have been urged by a large number of organisations not to delay the deadline, including ACPO and a large number of organisations in the industry, which believe that the Act will be helpful to them. We have also been urged not to delay by people who are involved in dealing with antisocial behaviour, who want the new powers that come with the Act so that they can deal with concerns about that.

Janet Dean: I understand that some local authorities take a different attitude to licensing, and obviously there will be differences round the country. Is there a perceptible difference in the percentage of applications made in different parts of the country, or is it pretty uniform?

James Purnell: That is a good point. Application rates vary. Among the best ones, Bolton, for example, is up to 40 per cent. Some are below 20 per cent. We are working closely with all local authorities and have worked specifically with those that have received fewer applications, to make sure that we can help them increase the number of applications that they receive.
	The right hon. Member for Maidenhead mentioned the cost of licences. Yes, the cost of alcohol licences has gone up, but she knows very well that the reason for that is that previously the taxpayer was subsidising the cost of running the system, to the tune of £25 million a year. When the Bill went through Parliament, we said that that should not continue to happen. The taxpayer should not continue to subsidise the sale of alcohol because people are making money out of it. She and her party agreed with that principle.

Several hon. Members: rose—

James Purnell: I have given way a number of times. I shall make a little progress.
	It is important that the cost of the fees represents the actual cost of administering the system. That is why we have asked Sir Les Elton to examine the issue. The right hon. Lady will be happy to know that we have asked him   to report by November with some initial recommendations, particularly if there are any anomalies to be addressed. He needs some evidence about the implementation of the Act before he can present us with evidence about the cost. That is why we said that after that first report he should report 12 months after the Act comes into force. Local authorities and industry broadly agree with that.

Peter Luff: Will one of the anomalies that the Minister considers be the issue of sports clubs or holiday caravan parks such as the Ranch caravan park in my constituency, which is now assessed for its fee on the whole area of the park, not just on the size of the bar or the alcohol that is serves?

James Purnell: That is one of the matters that we have asked Sir Les Elton to consider. I am told that it depends on its hereditament and that it can apply, if it wants to, to have its rateable value applied just to the area where it sells alcohol. The hon. Gentleman's constituents can examine that if they are concerned about it. We will ask Sir Les Elton to consider that issue overall.

Chris Mole: The Minister will recall that I wrote to him about a speciality cheese shop in my constituency that sold alcohol as a very marginal element of its business. Will he confirm that it would be right and proper for that business, and others that hon. Members mentioned, to make its contributions directly to Sir Les so that we can judge the Bill in its entirety, not on the anomalies that have been raised by a few hon. Members this evening?

James Purnell: We will indeed look at that. My hon. Friend may well find that that shop is at the lower end of the rateable value. If it is right at the bottom end, it will be paying £70 a year. Those are exactly the kinds of issues that we want Sir Les Elton and his colleagues to consider.
	Let me say a few words about village halls, which several hon. Members have concerns about. We have responded to what the Prime Minister said at Prime Minister's questions. Today, I met representatives of Action with Communities in Rural England, having spoken to them previously, and we are going to consider their concerns. They have been working closely with my officials over the past few months and have been kind enough to say in their publication that the DCMS has been extremely helpful in helping them to explain to people how to comply with the Act.
	ACRE is concerned about three things: the cost of the annual licence; the up-front cost of applying for the licence; and the fact that some volunteers are worried about the legal responsibilities that they take on. We have tried to clarify some of that, for example by saying that there is no need for the personal licence holder or the designated premises supervisor to be on the premises at any time that alcohol is being served. That has reassured people. We will continue to work with ACRE over the next few months on those concerns. We have written to Sir Les Elton to ask him to consider charges for village halls as a matter of urgency, and we will think about whether there are any other issues that we can deal with.

Alistair Burt: I am puzzled. If the Minister thinks that charges being levied on village halls are too high, why does he have to refer it to anyone? Can he not make a decision instead of asking Sir Les to look into it?

James Purnell: I have responded to what ACRE—the representative body that we are dealing with—has asked us to do. It would be wrong to make a decision before the Act has come into force based on an inadequate understanding of the evidence involved. We are doing exactly as ACRE has requested, which is to look at the evidence that it collects and to refer it to Sir Les Elton, and if there are problems to try to address them in any way that we can. If there are matters that require primary legislation, we will have to wait for a legislative opportunity, but for those that do not require such change we will be happy to deal with them if there is evidence that that is required.

Richard Benyon: In the year of the volunteer, does the Minister understand that bureaucracy like this is driving people away from doing important voluntary acts such as being on a village hall committee? It is not that these people have nothing else to do with their time—they really want to do something good for their community, but this sort of thing is stopping them volunteering.

James Purnell: We completely support and appreciate the work that is done by volunteers across the country, including in village halls. When I met ACRE representatives today, it was clear that many village halls have successfully applied for licences and that many welcome the extra flexibility that they will get, just as pubs welcome it. However, we recognise that some village halls would rather not take out a licence and would prefer us to increase the number of temporary events notices, or TENs. We do not rule that out, but it would need to be carefully considered. During the Bill's passage through Parliament, we increased the number of TENs from five to 12. It is worth noting that that regime is extremely deregulatory. Essentially, it allows the applicant to put on an event that can last for up to 36 hours without anybody being able to object apart from the police, who can do so only on the grounds of law and order. In effect, people can run events without any closing time and with no opportunity for the local community to make representations. If we accepted the suggestion of the right hon. Member for Maidenhead, we would effectively have 30 of those events happening in any of our constituencies during the year, and they would not be confined to village halls—they could be in pubs or anywhere else. If we did that without properly considering the evidence, our constituents might be rightly concerned that we had gone too far in the direction of allowing flexible drinking.
	However, we do not rule out moving on the issue of TENs, and we are happy to look at submissions on that over the summer when we consult on regulations for the TENs regime. We will also be happy to consider whether there are particular ways in which individual categories of licensees can have the regime apply to them in a different way.

Nick Herbert: Does the Minister accept that this problem extends not only to village halls and temporary events but to small village shops? These are small shops, not areas where there is a problem of binge drinking. One in my constituency is only just being maintained by the actions of villagers. It is having to subscribe a very large sum of money in payment to consultants to help it to fill in forms. The village shop is confronting a permanent problem that will not be addressed by the measures that he is suggesting.

James Purnell: I do not want to test the patience of the House by going on too long. I think that the hon. Gentleman's village shop would be able to apply for mandatory rate relief, which should save it a significant amount more than the cost of the annual licence. We understand the vital role of village stores and have already tried to do what we can.
	We will continue to consider the representations from ACRE. It agreed today to come on to our high-level group and to help us further with implementing the Act. Of course, we will continue to work with the Central Council of Physical Recreation, with carnivals, with working men's clubs, with circuses, with small village stores and with any other organisations that I may have failed to mention.
	The next stage of implementing the Act will come after 6 August, when we will work closely with local authorities on processing what we recognise is a late surge of applications. We have agreed with them that we will institute a national helpline to help them with that and that we will have a further wave of advertising after 6 August specifically to target people who have failed to apply by that stage. I want to put on the record my thanks to all the council officers, officials and councillors who will work very hard over the summer; we are very grateful to them.
	We have turned the corner. Applications are up. We have clear plans to target those who miss the 6 August deadline. We are working with local authorities to help them to process applications. We will continue to listen to individual sectors' concerns and to address them where we can. Implementing this radical reform was always going to be a challenge, but it is a challenge worth going for. This Act will be better for local communities, better at cracking down on the irresponsible minority, cheaper and more flexible for business, and better for the responsible majority. We should not be subject to curfew because of the problems that people have with the irresponsible minority. I believe that when we look back on this Act in one or two years' time, people will recognise that it is a much better framework of law than the one that we had. At that stage, we may even have the Conservatives coming up with a fourth position—that it was their idea all along.

Don Foster: I believe that all hon. Members would like to congratulate the Under-Secretary on a sterling performance. He has been dealt an especially bad hand and he is doing his best to play it. However, hon. Members will have been astonished by the way in which he has done it. Throughout his speech, he acknowledged a range of problems with the Licensing Act 2003.
	At a time when the Act is almost due to be implemented, a Minister stood before us and promised that he would continue to consult group after group—village halls, carnivals, circuses, small shops or anything that anyone cared to mention—about the various issues. He even told us that, during the summer, there would be consultation on the temporary events notices arrangements. I stress that all that relates to a measure that is already in force and is due to be effected on 24 November. I therefore congratulate the Under-Secretary on his willingness at least to listen to the concerns. The Government would have done well to listen to the concerns that hon. Members of all parties raised about this measure when the hon. Gentleman was not a part of it.
	All hon. Members will acknowledge that we have a serious problem of binge drinking. I mention that because the Under-Secretary wanted me to deal with his anxiety about our position. In a recent parliamentary question, I asked about the increase in violent offences connected with licensed premises. In the past 12 months alone, the figure has increased by 15 per cent., so that a staggering 50,000 such offences were committed in England and Wales in the past year. Recent figures show that admissions to accident and emergency departments resulting from alcohol abuse are now a staggering 25,000. A parliamentary question from my hon. Friend the Member for Hornsey and Wood Green (Lynne Featherstone) elicited the response that, in the past 12 months, there has been an increase of 18.5 per cent. in alcohol-related deaths. We are storing up a huge problem. According to the Government's figures, 44 per cent. of 18 to 24-year-olds binge-drink at least once a month. Again from the Government's figures, we know that binge drinking costs our society more than £20 billion a year.
	What has been the Government's response to that? They were elected in 1997 and it took them six years to devise their alcohol harm reduction strategy. In that time, 240,000 people died from alcohol abuse. It took until last year for the Prime Minister to acknowledge that binge drinking was a British disease. The Government did not consider existing legislation to ascertain whether it could help to tackle the problem. Legislation exists to prosecute landlords for allowing drunken or riotous behaviour on their premises. Since 1997, when the Government came to power, there has been an average of only 11 prosecutions a year. That shows how little use is made of existing legislation.
	Legislation also exists to prevent people from buying drinks for others who are clearly drunk. Yet how many prosecutions have been brought since 1997? The answer is a grand total of 12—and in 2000 or 2001, none were brought.

Meg Hillier: rose—

Jonathan R Shaw: rose—

Chris Ruane: rose—

Don Foster: I shall give way to all three hon. Members shortly. I simply want to make it clear that legislation exists to deal with some of the problems. The Government introduced a new measure—in the Criminal Justice Act 2001—to tackle the problem. It provides that it is an offence if an employee as well as the landlord serves alcohol to someone who is behaving drunkenly. The Under-Secretary will be interested to know that, since the measure was introduced, not one successful prosecution has been brought.

Meg Hillier: In the hon. Gentleman's litany of criticism, will he acknowledge that the Government have allowed local people to have a say in licensing in their area and to approach their democratically elected representatives about the licences? Surely he can at least acknowledge that that is a good step forward.

Don Foster: I am delighted that the hon. Lady believes that the Bill does that. However, people in my constituency—and, I suspect, in hers—would say that that is not the case. In the majority of cases, we have the ludicrous position whereby a local councillor, who represents an area where there are public houses, cannot get involved in the deliberations about the licensing of a specific pub. Local representatives cannot get involved. As I shall show shortly, special saturation polices, which were introduced at the last minute to help local communities, are a complete mess. I am being polite.

Jonathan R Shaw: The hon. Gentleman recited statistics relating to death and incidents involving binge drinking. He also talked about his local community. Is he still in favour of 16-year-olds buying alcohol and drinking? Does he believe that the people of Bath would think that was a good idea?

Don Foster: No, I hope those people would not. The hon. Gentleman is picking up a hoary old story, but, if he wishes, I shall respond. We believe that, over time, we should move the age of majority for many events to 16. We have also made it clear that, in the current climate of binge drinking, it would be irresponsible to do what the hon. Gentleman suggests.

Chris Ruane: The hon. Gentleman uses the term "binge drinking". Will he enlighten the House about the number of units that would qualify one to be a binge drinker?

Don Foster: Instead of spending much time on that, I refer the hon. Gentleman to a good publication that he will have received in the past couple of days from the Parliamentary Office of Science and Technology. It provides a good definition. I shall not read it out but it is in Box 1 and he can read it.
	Since I have an opportunity to refer to that document, let me consider whether, in this country's climate of binge drinking, the measure that has been passed but not yet implemented will be beneficial. On the police, whom the Under-Secretary mentioned, the document states:
	"The changes to licensing laws have been widely criticised by scientists, clinicians and the Police."
	Leaving that and the reference to the recent conclusions of the Home Affairs Committee aside, I draw attention to the expert advice of the Science and Technology Committee. It bears reading precisely. It states:
	"Central to this debate is the issue of whether or not increasing access to alcohol will lead to a rise in consumption. Experience from various countries around the world is mixed. For instance, in Perth, Western Australia, an extension of bar opening times from midnight until 1 am led to a rise in alcohol consumption, violence and drunkenness. Similar effects have been reported in Iceland, Ireland and Canada, while a reduction in licensing hours in Norway, Finland and Sweden led a decrease of alcohol consumption among heavy drinkers."
	But then it quite fairly puts the other side of the argument, saying:
	"On the other hand, availability of alcohol in many Mediterranean countries is not restricted and yet those countries are not affected by binge drinking on the scale seen in the UK. Overall, it appears that the prevailing drinking culture is a key factor in determining consumption patterns."
	Crucially, it goes on to say:
	"In those countries with a well established binge drinking culture, increasing access to alcohol has led to increased consumption."
	It would be absolutely crazy to press ahead with this legislation without first having put in place measures to tackle binge drinking.

Alistair Burt: The hon. Gentleman was rather cheekily challenged on his party's attitude to binge drinking. Might not that intervention have had rather more force had not one of No. 10's policy advisers, Miss Casey, given a rather different interpretation of binge drinking last week? It ill becomes Labour Members to take up that issue tonight before there has been a full recantation of such views by such an important adviser.

Don Foster: The hon. Gentleman makes his point eloquently.

Mark Pritchard: Does the hon. Gentleman agree that, although the Government are obsessed with public research, they are ignoring their own research into public opinion, which shows that the country is not with the Government on this issue? The country does not want an extension of licensing hours. Market towns such as Newport, Shifnal and Albrighton in my constituency see the after-effects of binge drinking on Thursday, Friday and Saturday nights.

Don Foster: The hon. Gentleman is largely right. However, I suspect that his constituents, like mine, will welcome some aspects of the Licensing Act, such as the increased powers of the police to take action against bad behaviour in pubs and clubs. Some people might, in certain circumstances, welcome the flexibility that the Act provides, but there are many other aspects about which people are rightly concerned.
	I do not wish to repeat the points made by the right hon. Member for Maidenhead (Mrs. May), who identified a large number of problems relating to the Act. I merely wish to add a few more to the list, so that the Minister can explain, to the House and to anyone else who might be interested, how we got into a situation in which the Government have introduced legislation that is frankly a complete and utter Horlicks from beginning to end.
	For example, the Act provides for an escalator for the fees charged for big pubs in town centres where there are problems. That is fine—we understand the "polluter pays" principle—but why will nightclubs not have to pay an escalating fee as well? Nightclubs contribute equally to the problem in many of our town centres, yet they will get away scot-free. That simply does not make sense. Why will pubs have to pay £1,200 for the first year and £700 in subsequent years, when nightclubs will pay nothing? We know the answer. The legislation defined nightclubs as not being primarily for the sale of alcohol. The Government should have spotted that and done something about it.
	At Question Time yesterday, I raised the issue of a special saturation policy. Surely the Minister must acknowledge that only about one in five local authorities have availed themselves of what might have been a good opportunity for local communities to control problems in their locality, because, as Andrew McNeill, the director of the Institute of Alcohol Studies says,
	"it's going to be a legal minefield".
	We need a solution to that problem.
	The right hon. Member for Maidenhead and the Minister have talked about a late surge in applications. Has it not occurred to the Minister why there is a late surge? It is because of the way in which the Act is framed. It says, bizarrely, that if someone applied for their new licence on the first named day, back on 7 February, they would next have to pay for their renewed licence on 7 February next year. However, if they delay applying for their licence for as long as possible, they will not have to pay for their renewed licence until very much later. So there is a perverse incentive for people to delay their applications, and it should come as no surprise that that is what pubs and clubs are doing.
	The hon. Member for Mid-Worcestershire (Peter Luff) is not in his place at the moment, but I know that he is particularly exercised about this aspect of the Act. He had a debate on the subject in Westminster Hall on 2 June, during which I intervened on the Minister and asked him to explain a number of potential anomalies in the legislation. I should like to give the Minister the opportunity to do that tonight, because he has now had more than a month to work out his answers.
	Can the Minister tell me whether the licensee of a hotel will breach the Licensing Act if a 16-year-old is left by themselves in a room in that hotel that has a mini-bar? Hoteliers are concerned to know. Clearly, after a month, the hon. Gentleman still does not know. I shall try again with another point. Is it illegal for a 16-year-old to go into a supermarket between midnight and 5 am to buy a loaf of bread, if that supermarket is selling alcohol?

James Purnell: That is perfectly legal, and on the hon. Gentleman's other point, we have no policy objective of making that illegal either, so both those points are distractions.

Don Foster: The question is not whether that is a policy objective but whether the legislation makes it illegal or not. Can the Minister tell us whether it is legal in relation to the hotel?

James Purnell: indicated assent.

Don Foster: It is legal. Good. Many people will be delighted to know that we have an answer. Equally, however, many questions remain unanswered.
	In relation to the point raised by my hon. Friend the Member for Somerton and Frome (Mr. Heath) about carnivals, the Minister has said that the Government will look into his helpful suggestion. The Minister should be aware, however, that under the current legislation a float in a carnival can legally go ahead and not require a licence, but the marching band coming behind the float is likely to be in breach of the legislation, which is why carnivals, which are often hybrids of floats and marching bands, are so concerned.
	The Minister agreed to look into the issue of circuses, but we still do not have clear answers. He has also agreed to look into the issue of village and community halls, but again we do not have clear examples. In relation to temporary event notices, he says that consultation on the details has not even started, and he said interestingly today that the number of events in a particular village or community hall will be considered before such a temporary event notice will be given, which will be welcomed by the House.
	The Government have also made a Horlicks in their failure to do much about the legislation once they got it through Parliament. The Minister has only recently been on his grand tour, having all his press conferences, having photographs taken and sending out leaflets. It was far, far too late. The Government must take much of the blame for the low take-up, not only because of the fee structure but because of the failure to publicise the legislation.
	Is the Minister aware of the problem in respect of theatres? We are told of a figure of 33 per cent. overall, but I have evidence that only 10 per cent. of theatres have so far applied. Will he advertise to them the need to do something? Why are so many parent-teacher associations, individual schools and others still applying in their droves to magistrates courts for licences for events that will take place after 24 November? Clearly, they have not yet been told that they need to do something differently.
	Why have local authorities, which were abiding by the guidance issued by the Department, only recently started to be slightly more flexible about whether they can accept application forms in the wrong colour ink? Many application forms have been rejected because they are in the wrong red ink. At long last, the Department has said that local authorities should forget the guidance that it issued, and that it was perhaps a bit over the top. [Interruption.] That is true, and the Minister should be aware of it.
	All that is not surprising, because everything was done so late in the day. The fee regulations were published on 20 January this year, only two weeks before the first appointed day, 7 February. Interestingly, as Members will know, the House did not get round to debating the fee regulations until 23 February, long after the first appointed day, which incidentally is in clear breach of the parliamentary 21-day protocol.
	Delay in respect of the pub use class orders also raises issues. We were told that pubs were going to be made a single class order. A press release issued on behalf of the then Minister for Housing and Planning on 27 November 2003, was entitled, "Hill calls time on high street blight". But when was legislation brought before the House? As we know, the Government acted 14 months later, on 21 January 2005, and yet there is clear evidence that in the intervening period there was a huge upsurge in the number of pubs and clubs on our high streets, the competition between which drove down the price of drinks and led to the development of the happy-hour culture.
	I genuinely believe, and I say to the Minister, that there is no evidence to suggest that the Act will help deal with binge drinking. It is clear that it is extremely uncertain that it will. It would therefore be sensible to delay implementation. The Government could and should be doing a number of things, such as providing for better labelling of alcoholic drinks, more funds for treatment of alcohol abuse and improved alcohol education in our schools—and what about at least giving the House some benchmark statistics to enable us to judge whether the Act, if implemented, will have led to the improvements that the Minister has claimed for it? We have seen no evidence of the Government's willingness even to consider producing agreed figures of that kind.
	We also need to know about a minimum price policy. At present there is total confusion over the ruling of the Office of Fair Trading on whether local authorities have power to set a minimum price for drinks.
	The Act was rushed through, not as a result of a desire to deal with binge drinking but to pander to the youth vote, as we know from the infamous text message
	"Cldnt give a XXXX for last orders? Vote Labour for xtra time."
	We know why the legislation was introduced. It was not introduced to address the issues of binge drinking. It was introduced in haste, without thought. Indeed, as the Minister said, the Government are still thinking about it now. It is full of problems, and is causing a great deal of difficulty to a great many people. It would be far better to concentrate on some of the other measures that could deal with binge drinking before implementing the Licensing Act.

Robert Walter: On a point of order, Madam Deputy Speaker. For about half an hour this evening, Members and Peers were prevented from entering the building while the House was sitting. If the sitting had been suspended or the building had been evacuated, that would have been a legitimate reason for refusing entry. However, if it is the Metropolitan Police Commissioner who, in contravention of the Sessional Orders, has prevented Members from entering, may I ask for Mr. Speaker to request the Home Secretary to come and make a statement to the House? I believe that that is a serious contempt of Parliament and know of no constitutional precedent for Members being refused entry while the House is in session.

Madam Deputy Speaker: I understand that what the hon. Gentleman says about access is true. Whatever has been done will have been done with the knowledge and under the direction of Mr. Speaker.

David Clelland: What we need are more flexible opening hours, and that is one welcome aspect of the Act. Flexible opening hours will certainly be a big improvement on the current position. Few if any establishments will want to open for 24 hours. Indeed, I think the Minister confirmed that none had applied to do so. A more flexible system to replace a single chucking-out time will probably lead to a more staggered leaving of pubs and clubs—if that is the right term to use in this context. It would not work if some pubs closed at 1 am, some at 2 am and some at 3 am, because people would simply move from one to another, but I think that the later such establishments stay open, the more likely people are to disperse gradually. The current thinking of the Tyneside police is that the appropriate time is 3 am. I do not know whether that is the case, but it is probably about right.
	The Act will be an improvement on the current system because of that greater flexibility and because there will be a single licence rather than the six for which people must often apply nowadays. After the initial registration, there will be less red tape. The Act will also bring more local control and more consideration of the needs of local communities.

Charles Walker: Given the concerns of many chief constables, might it not have been better to trial the arrangements in certain towns to establish whether they would indeed reduce binge drinking and the violence that results from it?

David Clelland: So far as I am aware, this proposal has been trialled throughout Europe, and notably in Scotland, for many years. The experience is that flexible opening does lead to less binge drinking and to less trouble on the streets.
	The Act will also give local representatives more power to control licensed premises in their area in the interests of the local community, and to tailor activities and opening hours accordingly. For instance, local authorities might treat pubs and clubs on housing estates differently from those in city centres. But there is no doubt that implementation has led to some problems and I hope that the Minister will look again at how some of them might be alleviated. I do not share in the doom and gloom and cries of "Chaos!" from Opposition Members, but there are some issues that need to be addressed.
	Last week, I had the honour to be elected joint chair of the all-party group on non-profit-making members' clubs. There are more than 5,000 of these private clubs throughout the country, and they are covered by the Working Men's Club and Institute Union and the Committee of Registered Clubs' Associations. Such clubs include working men's clubs, Royal British Legion clubs, RAF clubs, and Labour, Conservative and Liberal clubs. They are run for, and by, the members themselves. The members elect the committees and the committees elect the secretaries. They do not have the resources or the professional expertise of the big organisations. They are run by—dare I say it?—amateurs, although often very professionally. Some do have full-time secretaries, but they are not the professionals whom we expect to see in the big organisations.
	There is no doubt that many club secretaries have found filling in the 18-page form daunting. I agree with the right hon. Member for Maidenhead (Mrs. May)—that does not happen often—that, regardless of the number of boxes that club secretaries eventually need to tick, they still have to read the entire form to decide which need to be ticked and which do not. I spoke to one of my local club secretaries—a very intelligent man who runs an excellent club—as recently as last Saturday, and on first receiving the form, he found it daunting and put it away in a drawer. On looking at it carefully some time later, he discovered that it was not as daunting as he first thought. On the other hand, club secretaries are often elderly and not necessarily computer literate. They have found dealing with these issues difficult, which may explain why less than 25 per cent. of clubs have returned their applications to date. Of course, the rate of return is increasing as 6 August appears on the horizon, but that in itself could cause problems as local authorities struggle to deal with an avalanche of applications. The Minister will doubtless want, as he has said, to stick to the deadline, but it is obvious that there will have to be some flexibility.
	I am afraid to say that there has also been a considerable increase in the associated costs for clubs. A £16 licence will now cost £190, and to that must be added the cost of solicitors. The right hon. Member for Maidenhead said that solicitors have a licence to print money, but they have never needed a licence—they do it without one. Architects' plans are very expensive and we should also consider the cost of advertising. Some newspapers have capitalised on the situation by doubling the cost of such advertising. Clubs are having to fork out as much as £1,000—that is not an unusual sum—to comply with the administration associated with this legislation, so this is a problem. The Minister said that the legislation will save the industry some £2 million a year, but it will not save working men's clubs and non-profit making members' clubs that sort of money. They do not make a profit, so the extra costs will have to fall on the members.
	On Monday, I asked the Minister whether he would include a representative of clubs on the licensing fees review panel, which Sir Les Elton will chair. The fee structure is a very important issue for clubs, so I hope that he will look at it and that more can be done to help clubs through that vehicle. Will he also look at the way in which local authorities are handling this matter? There is evidence to suggest that some councils and some police forces are pressurising clubs into applying for a premises licence, rather than the club premises certificate. That might make matters easier for local authorities and the police, but it will not be advantageous to clubs. They would be well advised not to take that course and to stick to the premises certificate.
	There are some advantages for clubs in the new legislation. One is that they will be able to hold up to 12 special events in which non-members can participate without having to apply each time for a special licence. That will apply to weddings, christenings, birthdays and so forth and is to be welcomed. That was the intention. However, we now find that some local authorities take the view that if "The Dog and Duck" darts team visits the local club for a game of darts, that represents one of those special events. If that happens, all the special events in most clubs will be taken up in the first month, which I am sure is not what the Minister intended. I hope that he will look further into the problem and ensure that local authorities are advised that that is not the intention behind the Act.
	In its operation, once up and running, the Act will be an improvement on the legislation that it replaces. It contains many welcome provisions and will make for a more flexible and less bureaucratic system. However, for whatever reason, it is causing initial difficulties and could lead to some smaller clubs and organisations losing their rights to trade after 24 November. I realise that that is not what Ministers want or intend and, with a little readjustment and a little rethinking, I am sure that the problems can be overcome.

Paul Beresford: My right hon. Friend the Member for Maidenhead (Mrs. May) provided us with a long list of complainants and most of the complaints also apply to my constituency. However, I want to focus on one particular aspect—village halls. The Prime Minister gave us a glimmer of hope, and the Leader of the House a faint glimmer of hope the next day, but I have to say that, in a Westminster Hall debate, the Minister brushed aside village halls in about five words. He seems to be a little more amenable this evening. I rather hope that we can secure much more rapid progress than he suggested in his opening speech.
	As I mentioned in an intervention during the Westminster Hall debate, my constituency has about 32 villages, almost all of which have halls as well as churches that also have halls. I estimate a total of about 50 such halls in my constituency.
	I cannot remember receiving so much vitriolic correspondence from so many people as I have received in connection with these halls. I would like to present to the Minister a few extracts from those letters. People from the Leigh village hall, for example, justly proclaimed that the hall was
	"a central component of village life, providing the premises in which many activities are pursued. It is managed and maintained by a group of very publicly-spirited villagers, who give considerable time and effort to ensure it is always available as a clean"
	and attractive venue. They are deeply concerned about the new regulations and the fees, which they believe are already discouraging their voluntary helpers. It is, they state,
	"the antithesis of proclaimed government intent to support and reinvigorate rural communities such as Leigh."
	Their point is that people living in rural areas who
	"give up their time, on a voluntary basis, to support their village hall"
	after returning home from work in the evenings or on Saturday and Sunday mornings
	"are alarmed at encroaching regulation, which makes it increasingly difficult to sustain their hall",
	which plays an "essential part" of village life.
	Another example is from people associated with the Beare Green village hall. I shall pick out just a few points from a very long letter. The letter explains that the hall has been sustained up to now on the basis of making a tiny profit from each event. It runs a number of events and views a good profit as £100. Presently, six event licences cost £10 in total, but under the new regime, each temporary event notice licence will cost £21, putting the total up to £126, which obliterates more than the profit from one event.
	A letter from Ripley village hall states:
	"The appointment of a Premises Supervisor will be virtually impossible due to the unreasonable burdens placed upon the position."
	Another example comes from one of my tiniest villages with a tiny hall. Thus, Holmbury St. Mary
	"would like to emphasise that for small, multi-use halls such as ours, which are run entirely by volunteers for a local rural community, this new Act is a nightmare. The paperwork is oppressive whilst the limit of only 12 functions per year at which alcohol can be present is far too small."
	Thirty is the number that it would like.
	I am aware that some of my hon. Friends want to add to my comments, so I shall be prompt. Essentially, under the new regime, people associated with my village halls feel that there is excessive bureaucracy. They have to produce plans, but they are not clear why they are required. Some have felt the need, as mentioned earlier, to consult lawyers and they are also required to produce an operating schedule—whatever that is for these tiny little halls.
	Generally, each of these little village halls is run by a small group of people who are bullied and cajoled into serving. No one wants to be the designated licence holder. All the people to whom I have spoken think it ludicrous that the temporary event notice licence has been set at one dozen, and most would like the limit to be three or four dozen. Moreover, all of them feel that the fees are far too high, especially given the minimal profit—if any—that the halls make. The House must bear it in mind that most village halls are run for the community, not for profit.
	Some positive points have been made in the debate. I hope that the Minister will take them forward, and that he will do so quickly, as village halls that do not break even will close and never open again. I am tempted to suggest that Ministers might consider setting a de minimis level for some of the very small halls. Such halls serve very small communities and are run by a very few people, and they could easily fall below the de minimis level.
	In such cases, there is clearly a need for a dramatic reduction in the fees. I hope that the Minister will consider changing the thinking behind the Act slightly and introducing the concept of personal licence holders for temporary events. Under that proposal, the person running an event would apply for a licence, at the previous level of £10. He or she would take responsibility for the event, with the result that the hall would not have to provide a person who would be personally responsible.
	Local halls are vital in rural areas such as mine. Surrey is full of such halls, and they are of enormous value. Events such as Guy Fawkes night, Christmas and new year's eve will be on us soon, and the House must remember that local halls also present film evenings, opera sessions and so on. Although he does not come from a rural area, I hope that the Minister will accept that they play a very important role. We must save our village halls but, if it is not changed, this Act will destroy them.

Adrian Bailey: I rise to support the amendment and oppose the motion. The somewhat apocalyptic opening speech by the right hon. Member for Maidenhead (Mrs. May) did not do justice to the real issues in this matter. In contrast, the hon. Member for Mole Valley (Sir Paul Beresford) gave a much clearer demonstration of the genuine difficulties and offered a much more constructive approach to dealing with them.
	The right hon. Member for Maidenhead presented an apocalyptic vision of what local communities would be like after 24 November, with thousands of desperate drinkers milling around the streets looking for a bar that was open and congratulating those publicans who had managed to surmount the bureaucratic obstacles placed in their way by the Government. Similarly, I could imagine the heroes of my local Wednesbury rugby club turning up for after-match celebrations based on sandwiches and diet Coke. Again, according to the hon. Lady, toddlers and mothers would be crying in the street because they could not hold sessions for young people in halls and clubs whose locked doors bore the notice, "Closed Due to Government Bureaucracy".
	I do not want to pour scorn on the genuine problems that people have raised, but overstating the case does the argument against the Act little good. I trawled through my memory for complaints that I had received about the legislation and recalled that, when the idea was first mooted 18 months ago, one sports club told me that it was worried that its bar might be priced out of activity. However, since the publication of the fees and the various regulations, I have received no correspondence whatever on the matter.
	I have received correspondence from any number of my electors about nuisance from pubs, about antisocial behaviour generated by binge drinking youths and about clubs and publicans who were not prepared to recognise the legitimate concern of their neighbours about noise nuisance. I do not want to stigmatise thewhole profession, because some publicans are responsible and are concerned about their locality and operate in a way that is compatible with good relations; none the less, there is substantial concern about the antisocial behaviour that is often associated with drinking.
	The Act was passed in July 2003, so, by 24 November, people will have had two years and five months to apply for a licence and to get acquainted with the Act's provisions. The Government have not been passive. The Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Stalybridge and Hyde (James Purnell), who is not in the Chamber at present, listed the activities in which he has been involved to promote the legislation and the need to apply for a licence.

Philip Dunne: It is only fair to point out that, in most local authority areas, the forms and guidance for applying for the new licences have been available only since the beginning of April, not two and a half years as the hon. Gentleman suggested.

Adrian Bailey: No, but the hon. Gentleman overlooks the fact that there was debate with the industry and trade associations long before that. They were involved in drafting the regulations and the form from August 2004 until their publication in January or February 2005. They have had plenty of opportunity to become acquainted with the legislation and to understand the application process before the licences were available.

David Lepper: When the actions that the Minister spoke about earlier are supplemented locally by a proactive local authority, we can see the results. In my local authority, Brighton and Hove city council, until the beginning of last week, 78 per cent. of the premises expected to apply for a new licence had done so and more did so at the beginning of the week—I declare a non-registerable interest, as I have done before, as my wife is chair of its licensing committee. National action coupled with a proactive local licensing authority, offering support to the trade, can pay off. Does my hon. Friend agree?

Adrian Bailey: I most certainly agree. Indeed, my hon. Friend has just taken the next section of my speech from me.
	When I consulted my local authority, Sandwell metropolitan borough council, it was clear that it saw no problem. It has engaged in a consultation and advisory exercise with people who were affected by the legislation locally. The authority anticipates being able to meet demand for applications from would-be licensees and has said that, if it is necessary for staff to work long, extra hours to get the licences through in time, they will do so. It reflects well on the local authority and emphasises the point made by my hon. Friend. With a proactive Government and a proactive local authority, the difficulties can be overcome.
	My hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw) mentioned the kebab trade association, and that is an area of concern. In Sandwell, we have 23 kebab sellers, not one of which has as yet applied for the licence. I make a public offer to the Minister—unfortunately he is not in his place, but I am sure that his colleague will convey it to him—to come to Sandwell and share a kebab at one of our magnificent local culinary establishments to promote the need to license them. I assure him of a warm welcome.

Chris Ruane: What role does my hon. Friend feel that an MP can play in raising the issue of licensing in his constituency?

Adrian Bailey: That is a good point. For a start, they can speak in the Chamber to advertise the issue. I shall certainly ensure that my press release goes out to emphasise the point. When MPs know, after consultation with the local authority, that certain groups of licensees have not yet engaged with the process, they have an obligation to ensure that those people are informed of the need for a licence. We should do everything in our power to promote the new procedure.
	I note that the Opposition want to extend the deadline for the submission of applications, but I seriously caution against that. Whatever deadlines are set, some people—for a variety of reasons—will not meet them. Penalties accrue if people do not return their tax forms, but some still fail to do so. If we put back the deadlines, the danger is that it will send the wrong messages to people. The Government have already had one of the longest possible consultation periods and extended the deadline already. A further extension would send the message that there is not much pressure on applicants to send in their forms, and that would be counter-productive. Selling alcohol is a serious professional responsibility. If people wish to sell alcohol in our local communities but cannot—after the whole process we have been through—get an application in on time, it raises serious questions about whether they should be allowed to do so.
	My greatest concern is that, if we postpone the deadlines, we would also postpone all the other aspects of the legislation to deal with drunken and antisocial behaviour, including possible enforced closures and increased fines, which the public want. The Opposition's argument is that, because some difficulties have been experienced with the applications and fees from the licences, the whole raft of benefits from the legislation—which the majority of the public desperately want—should be postponed. That is not a credible position.
	The Act is deregulatory, which the Opposition say they favour. It is cost-effective and, in the long run, will be simpler for those involved. Above all, it provides much needed associated provisions that would deal with the social problems that plague us day in and day out. I therefore support the Government's position on the legislation.

Alistair Burt: I am delighted to follow the hon. Member for West Bromwich, West (Mr. Bailey). I am pleased that, in his considered opinion, he thinks that the measure is deregulatory. I invite him to spend some time with Mr. Rodney Tate, chairman of the Swineshead village hall management committee, to whom I shall refer again later, who spent at least a week of his life dealing with the complexities of the 2003 Act, so that he can discuss his view of its deregulatory nature. I am not sure whether that meeting should take place at the village hall or in the kebab shop, but perhaps they could come to an accommodation there.
	I shall do my best to be brief, as other hon. Members want to speak and an awful lot has been said already. I wish to tell the Minister that I revert to my usual position, which is that very few items of legislation are wholly bad or wholly good. I put the point to him that I put to the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Stalybridge and Hyde (James Purnell): Conservative Members' complaint is that all the evidence suggests that certain aspects of the legislation are defective and possibly highly damaging. What we seek on behalf of our constituents is a review of those items that are most damaging.
	I am not persuaded by what the Minister said, when he suggested that, because of his meeting with ACRE this afternoon, the concerns of village halls have been well taken into account during the consultation procedure. Hon. Members with village halls in their constituencies know that those representing village halls have been engaged in an active national campaign for months to draw the attention of the Minister and the Government to their concerns. An eleventh-hour meeting shortly before the Act is implemented is hardly evidence of consultation or good faith.
	I was not particularly taken in by that suggestion; nor was I particularly convinced by the fact that the matters in the Minister's remit about which he could take quick and urgent decisions were being referred to Sir Les for adjudication. It is unfortunate, of course, that the very mention of Sir Les brings to all our minds the great Sir Les Patterson, as personified by Barry Humphries, who knew so much about the cultural delights of alcohol that he was made the cultural attaché to the Court of St. James's. I know that this Sir Les is not the same one, but I think that he will live in our minds because of that very identification.
	I wish to refer briefly to the efforts made by my constituent, Rodney Tate, who has been engaged in long correspondence with both newspapers and others to set out the problems. I pay tribute to him. Like my hon. Friend the Member for Mole Valley (Sir Paul Beresford), I am picking out one example—I could pick out many more, as there are 54 parish councils, well over 70 villages and a lot of village halls in my constituency. Rodney's criticisms are shared by a good number of others. I am grateful to Sue Norman of the Bedfordshire Rural Communities Charity, who has also been very active on behalf of village halls, which she loves and promotes. She shares with many others genuine concerns about the legislation's impact.
	Rodney has been mentioned before in a previous speech as bringing the House up to date about these concerns. Swineshead is a village with 125 people in the northern part of North-East Bedfordshire. It has no pub—the pub closed about 10 years ago—and no shop. An active village hall committee is absolutely vital to the village's well-being. Profits are modest and are used to benefit the village, so the taking away of any profits in extra bureaucracy makes a substantial difference.
	Notwithstanding the review that is sent to Sir Les, I ask the Minister to pay urgent and immediate attention to issues that relate to cost in the first instance. The village hall's direct licensing costs this year will increase from £10 per annum to £240. As my right hon. Friend the Member for Maidenhead (Mrs. May) mentioned, the annual renewal charge will be £70 for that village hall. Villagers can think of better uses for that hard-raised money than spending it on those extra costs.
	The excessive bureaucracy was somewhat dismissed by the hon. Member for West Bromwich, West, but Mr. Tate tells us that he has spent a total of a week on seminars, form filling and correspondence. He draws attention to the fact that thousands of on-licence premises now need to apply for a variation of their new premises licences so that they can retain the extended opening hours over bank holiday weekends that were previously granted by magistrates' block extensions. As the hon. Member for Tyne Bridge (Mr. Clelland) said in his good and measured speech, that leads to extra fees, advertisements and notices to official bodies, so there is more bureaucracy to do something that is currently achieved with little fuss.
	When the Minister conducts his review, will he consider the different interpretations of the Act by local authorities that is leading to different levels of fees being charged in otherwise similar circumstances? The duties of designated premises supervisors has again been raised because their onerous nature is driving people away from volunteering to do that important social job in their villages.
	Additionally, individuals need to be trained to get a personal licence. Mr. Tate tells me that such training costs about £150, but the training needed for the licence holder at Swineshead village hall gives him the power to be the licence holder at much bigger premises, such as a town-centre pub. There is no correlation between the two roles, so the licence is being used inappropriately. It is ridiculous to train someone in a village hall in all the techniques required to run a big city-centre pub.

Charles Walker: Will my hon. Friend tell the House how many times the police have been called to Swineshead village hall to deal with disturbances over the past decade?

Alistair Burt: My postbag is remarkably silent about that. Scratching my head, I suspect that the answer is between nil and one, but I shall let the House know if that turns out to be wrong. My hon. Friend makes a fair point.
	Mr. Tate was recently required to adhere to special conditions of the public entertainment licence that is now required at Swineshead village hall. Condition 3 said that by 31 March 2006, the village hall had to
	"arrange for and maintain at least one Senior Member of staff"—
	Mr. Tate does not have any members of staff—
	"to be the holder of the British Institute of InnKeeping Awarding Body's  . . . National Certificate for Entertainment Licensees."
	That seems to be rather unnecessary, as Mr. Tate pointed out in his letter to the local authority.
	Another special condition has caused even greater concern in Swineshead. Bedford borough council's special condition 8 told the people of Swineshead:
	"There shall be no provision of lap, pole, table or podium dancing or similar style dancing or striptease without prior written consent of the Service Manager (Registration and Administration). This Licence does not constitute such written consent."
	Mr. Tate was proper enough to respond to the borough council. He wrote:
	"Condition 8 seems wholly inappropriate for a small rural village hall, but since we should never wish to engage in the banned practices, we should not object to this condition."
	I merely point out to the House the nonsense of such a condition even being suggested to a village hall, notwithstanding the fact that now that I have publicised it, I might be inundated with letters from the good people from Swineshead who perhaps do not agree with their chairman's quick approach on such a condition.
	I shall rest my case. Conservative Members have tried to suggest that elements of the Act are nonsense for village halls. Despite the humour that some objections have caused, the serious point is exactly that raised by my hon. Friend the Member for Mole Valley. The people who run village halls are volunteers, so the burden of their paperwork will be onerous. The money taken out of village halls due to bureaucracy will be lost to communities.
	People genuinely fear that damage will be caused. This is not scaremongering; it is real for those who have been campaigning on the matter for a long time. If the Minister and his colleagues can encourage Sir Les to conduct a rapid review of the circumstances and make some concessions for village halls, perhaps the Bill's good aspects will not be swept away with concerns about the bad.

John Grogan: It is a great pleasure to follow the hon. Member for North-East Bedfordshire (Alistair Burt), who put his case in his usual measured way. I feel I now know everything there is to know about Swineshead, and am all the better for it. I can boast more villages in my constituency than he can. I have 88, many with pubs and village halls, and I am doing my bit to publicise the licensing laws by going around as many of them as I can.
	I look forward immensely to 24 November. It will be a great day in our history when we finally sweep away the licensing laws, dating from Lloyd George and the first world war. At last, we will be able to go out and have a drink after going to the theatre or cinema and will not have to pay large amounts to go into a club environment. At last, when I am wandering around some of the 88 villages in my constituency and happen on a pub near to closing time that has its curtains drawn and is staying open after 11 o'clock, I will not have to leave as the Member of Parliament because it will be legal for well-run premises to stay open that late. As chairman of the all-party group on beer, it is almost worth throwing a party to celebrate that day when it comes.
	I noticed two different approaches from the Opposition parties. The Liberal Democrats took a fundamental approach. Unlike some of my colleagues, I like Liberal Democrats. [Hon. Members: "Oh!"] I do. Progressives are few and far between in North Yorkshire. It was once a completely blue county and we had many alliances. It is a cause of particular disappointment to me that the hon. Member for Bath (Mr. Foster) has gone back to the original Lloyd George position. The logic of his argument is that there should be no flexibility in opening hours. What would that do for binge drinking? People who go out under our current restrictive licensing laws are younger people. Our towns and city centres would remain dominated by them and they would have the same incentives to drink far too much far too quickly.
	According to an incomplete survey by the all-party beer group, more than 2,000 licensed premises have applied for extended hours. They do not want 24-hour opening, but an extra hour or two on a Thursday, Friday or Saturday. Those premises have had no objections and the applications have gone through on the nod. The only controversial application that I have been involved in was for the Charles pub in Heslington village. It is a student pub with a long record of complaints of noise and nuisance, and the application was rejected.
	I worry about the change in the Liberal Democrats' position. The hon. Gentleman said—I am sorry he is not in the Chamber to hear my little critique—that it is a pity that only a fifth of local councils have adopted the saturation clauses. Many rural districts do not have the problems of saturation of licensed premises that might be found in urban areas. It is not surprising that only a few of them have taken up that option.
	I advise the hon. Gentleman to be careful in his choice of quotes. He called in aid the Institute of Alcohol Studies as part of his criticism. One of its main funding bodies is the UK Temperance Alliance, which approaches the debate in a certain way.
	On village halls and sports clubs, the Minister has not done at all badly in recent weeks in grasping the issues quickly. Perhaps village hall and sports club secretaries are made of sterner stuff in Selby than they are in Surrey, but I have had only one letter on the subject. I do not mean to decry the seriousness of the subject. The one sports group that wrote to me is having to pay a £300 fee. On the other hand, it is getting £17,000 in rate relief from the Government. It is a large sports club. I worry more about the smaller sports clubs and some of the smaller village halls.
	Some interesting ideas have been put to the Minister, such as basing rateable value on the size of the bar and extending somewhat the number of temporary event notices. However, until Sir Les Elton undertakes his study and takes his evidence, it will be difficult to judge the impact of raising the number of temporary event notices from 12 to 15. What difference would that make to village halls? How many village halls would that help? By bringing forward the initial study and the initial review by 12 months so that we have the report by November, I think that my hon. Friend the Minister is responding to criticisms that are real but can be exaggerated.
	In the week that we won the Olympics, I hope that some of the London councils will now adopt a less churlish approach to the Act. The leader of Westminster city council has been quoted in a positive way. I am glad that he is beginning to recognise the potential for the development of London's entertainment sector in a safe way but also in an innovative way, now that councils have a say in licensing. We do not need a great structure of bureaucracy to implement the provisions in the Act in Westminster or in any of the London authorities, as health and safety and environment provisions are already very much in place. The fire authority is also in place, so those provisions do not need to be replicated.
	We need, however, to get a night life in London that is fit for the Olympic games. One of the first meetings that I went to about licensing laws was held by an organisation called London First. It said that we would never get a great sporting event unless we had a safe and varied night life of which we could be proud. We have six or seven years to get that right.
	The hon. Member for Bath has missed most of my critique, but as someone who went to Singapore and argued the case strongly for Britain, can he imagine having the Olympic games in London in 2012 without having some form of flexible opening hours? Will all the many visitors to London and all the many athletes, unlike in Athens last summer, have to go home at 11 pm? What a laughing stock we would be if that were the case.

Hywel Williams: I have a long-standing interest in the subject of the debate. My constituency was one of the very last in Wales to put an end to Sunday closing, which was one of the last gasps of specifically Welsh 19th century liberalism. As we used to say in my constituency, "If you want to drink on Sunday, you will have to wait until Monday."
	I share with other Members serious concern about the hard-drinking culture that seems to be prevalent, particularly among young people. I represent a tourist area, and there are concerns about the effects of the Act on small bed-and-breakfast businesses. My particular concern, which I have taken up with the Minister before, relates to the unavailability of Welsh language application forms so close to the deadline of 6 August. This might be a small matter in the grand scheme of things but it is particularly important to my constituency and to other constituencies in Wales.
	As I have said, I have discussed the matter with the Minister previously. I had a useful meeting with him, along with my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd) and others. I am glad that the Minister has moved from his initial position with reference to the non-production of Welsh language forms when he said:
	"The decision was taken that as most of the applications would be processed in English, it would be better for them to be submitted in English".— [Official Report, 13 June 2005; Vol. 434, c. 8.]
	That is decidedly not the case.
	I raised a further question with him yesterday because the situation has moved on in that Conwy county borough council in north Wales has now produced Welsh versions of the prescribed English forms. These Welsh versions are not prescribed, and I take the point that the Minister has made that it will not now be possible to prescribe Welsh language forms for another three months or so. However, the Minister has indicated that the Government are willing for local authorities in Wales to use the Conwy translation for now. That is all right as far as it goes, but some local authorities worry that a precedent might be established. If central Government have not provided the appropriate Welsh language documents, those authorities fear that they may be expected to step in. I hope that the current circumstances are unique and that no such precedent has been set.
	There are, however, further problems. Some local authorities may take the prudent view that they should not use forms that are not officially prescribed. Would they be liable if there were a dispute with an unsuccessful applicant, who could cite the fact that the Welsh forms that they used were not prescribed? More straightforwardly, who would be liable if there was a mistake in translation? Licensees might reasonably expect to use officially prescribed Welsh language forms and could be wary about using locally produced versions. Hon. Members may wonder how the situation has arisen and how the Government have got into a fix so close to the 6 August deadline. Essentially, the problems arise from a deficiency in the Welsh Language Act 1993, which provides for the publication of Welsh language schemes that provide guidance on the production of Welsh language material. It is surprising that, 12 years after the passage of the Act, the Department for Culture, Media and Sport has not prepared a Welsh language scheme. It has not been asked to do so, but I understand that it will now prepare such a scheme, which is most welcome.
	Finally, on a positive note, the Minister will be glad to hear that subsequent to our discussions, my own local authority, Gwynedd county council will adopt and adapt the Conwy forms. Those forms may be used in only a small number of cases, but I hope that they will solve the problem. The council will also take steps to publicise the availability of the Welsh language forms, and will target information at applicants who may wish to use them. I do not know whether all local authorities in Wales will take such action, but the positive steps taken by Gwynedd county council are welcome. It has pointed out, however, that Conwy county borough council has translated only five of the 100 or so forms available in English. The sooner that all prescribed forms are available in Welsh the better.
	As I said, the problem has arisen because of a weakness in the 1993 Act. DCMS was not asked to produce a Welsh language scheme, so it was not prompted to produce Welsh language forms. In Wales, that is interpreted as a reason for a further review of the Act and, indeed, as proof that it needs to be replaced. That is certainly my position, and it is the position of my party.

Philip Dunne: I am grateful to the hon. Member for Caernarfon (Hywel Williams) for keeping his speech brief and giving me an opportunity to address the House. I have discussed the issue with the Minister on previous occasions because, unlike the constituents of the hon. Member for West Bromwich, West (Mr. Bailey), two categories of people in my area have been inadvertently affected, including small, independent publicans. Much of the Licensing Act 2003 appears to have been drafted to allow major pub-owning groups to comply with the immense additional bureaucracy that, as I have seen for myself, is involved in the initial application. I appreciate that the application may not have to be repeated, but for a publican operating on his own, perhaps with the help of his wife—many of the pubs that are still going in villages in my rural constituency are run in that way—the prospect of having to complete a 77-page application is overwhelming. In a village near Bridgnorth that I shall not name for fear of precipitating problems, the publican is in the throes of deciding whether to carry on, given the challenge of completing the application form, not least the requirement to provide a seating plan of his pub. For what purpose? What on earth has that got to do with having a licence or not having a licence? There may be other health and safety reasons, such as fire regulations, for providing a seating plan showing the position of the chairs, but that has nothing to do with a licence. That is one category about which I am concerned.
	As the Minister is present, I want to raise an issue that was touched on by the hon. Member for Caernarfon—small guest houses. He mentioned bed and breakfasts in his constituency. We have a number of small guest houses in some of the towns in my constituency. I am thinking particularly of Church Stretton, an area that is trying to attract rural tourism. A number of the small houses there might have two or three bedrooms for use as bed-and-breakfast accommodation. They have a licence for the sale of the odd bottle of wine. The Minister said that the legislation would save money for these licence holders. At present a three-year licence costs £30. The licensees now face a tenfold increase in the cost of obtaining a licence. If they are selling only a few bottles of wine a year, I am told they will not bother to carry on doing so. So the Act may reduce the services available to the tourists in the area, making it less attractive and reducing economic activity.
	My constituent who runs The Studio restaurant in Church Stretton was unfortunate enough to go up a rateable value band as a result of the change in the rateable valuation. As a result, his fee will increase not just by 10 times the current charge, but more like 20 times, from £30 to £730 for no reason whatsoever, other than that his rateable value just tipped him over into band B.
	The second category, village halls, has been mentioned by many hon. Members. Rather than quote at length from the raft of examples raised with me by village hall committees, I shall pick up two points to illustrate the financial viability question posed by the legislation and a point about TENs. Brian Wilkes, who is the chairman of the Cleobury North and district village hall committee, tells me that the village hall
	"is run entirely by volunteers and last year the income was less than £3,000, with expenses of £3,600. The difference was met by donations and fundraising. We are applying for a new licence under 'grandfather rights', however this would restrict us as we would only be allowed 12 licensed events each year."
	He is concerned that the committee will not be able to put on sufficient events to meet its costs.
	The other example comes from Mrs. Mollie Oatley MBE, who is the secretary to the management committee of the Newcastle community centre, which is a thriving centre but has running costs of £10,000 per annum. At present the licence is provided by the village publican, Mr. Tony Burton of the Crown Inn, who runs the community bar and provides the profits as a contribution towards the hall.
	Because the committee has to hold so many events in order to meet its costs, the 12 permits allowed under the temporary events notice are insufficient, so the committee is contemplating having a full premises licence to allow 50 licensed events per annum. The problem is that Mr. Burton, as the first point of contact, is not prepared to undertake responsibility for that number of occasions during the year. As a consequence, he is proposing to pull out of the arrangement with the community centre and none of the other trustees are prepared to take it on. The point is a serious one, which I hope the Minister will address in his concluding remarks.

Malcolm Moss: The legislation seems to have been with us since the ark. It is now two years and rising, and the Under-Secretary of State is the third Minister who has been sold this hospital pass. The Minister of State should know better than to have delivered it into his hands in the condition in which it arrived.
	Flexible hours was never an issue. Twenty-four-hour drinking was never an issue, as the Minister continually asserts, most recently on the "You and Yours" programme only a few Fridays ago. There are real concerns, though, and there is considerable agreement on both sides of the House about what they are. They include binge drinking; the proliferation of drinking establishments in town and city centres; over-regulation; confusing, unintelligible bureaucracy; and loading unnecessary expense on sports clubs and community and village halls. Conservative Members are absolutely right to raise those matters in this debate.
	The motion is not an attack on the whole Act, only on those parts of it that are not working and unlikely to work in the time scale of implementation. We agree with the Government on the objectives—protection of children, flexible opening hours, and new powers for local authorities and the police to tackle nuisance and antisocial behaviour, which was mentioned by the hon. Member for West Bromwich, West (Mr. Bailey).
	However, five months into the application phase of the implementation of the Act, we are hearing alarming stories about the lack of applications, spiralling costs, widespread misunderstandings, and simple mistakes arising from the complexities of the system. In his parliamentary answer to me only a few days ago, the Minister estimated that approximately 47,500 applications for premises licenses and club premises certificates under the Act have been made—that represents approximately 25 per cent. of existing licensed premises and registered clubs—and said that he would expect 65 per cent. of those applications to involve variations. With variations, of course, come the possibility of objections, local hearings and appeals, and the rest of it. Surprisingly, the Minister went on to say that he had no estimate of the number of applications that will have included regulated entertainment as a licensable activity.
	The progress of the Act from July 2003 has been dogged by periods of delay and inactivity, accompanied by a refusal by all DCMS Ministers to revisit the timetable although it has been glaringly obvious that the necessary infrastructure has not been in place early enough to move forward to the next stage. It took a whole year for the Government to finalise the guidance to the Act. That guidance, which was acknowledged by both Houses of Parliament as being fundamental to an understanding of the Act, was published only on 7 July 2004, when councils were obliged to draft, consult and finalise their licensing policies. An Act of 201 clauses and guidance of 178 pages takes some understanding. Add to that the fact that at the time none of the secondary regulations had even been drafted, never mind approved, and if ever there was a recipe for confusion right from the start, that was it.
	The application in the transition phase runs to more than 245 pages, and copies of the 26-page form that my right hon. Friend the Member for Maidenhead (Mrs.   May) showed to the House have to be sent to eight"responsible authorities" plus the Licensing Authority—nine in total. The number of pages is the same whether or not one wants to change the licence in any way. Thanks to the Government's refusal to grant grandfather rights for the provision of live music under the two-in-a-bar rule and the loss of bank holiday extensions, many businesses will have to fill in 18 pages of the 26-page form that relates to varying the licence. The form is complicated and the process itself is complicated. I have had letters from individuals running clubs—experienced retired business people—who say that it took them 200 hours to complete the form satisfactorily to the Licensing Authority's requirements.
	In many cases, the lack of information meant that councils could not release draft policies until September or October, thereby truncating the consultation process and time for consideration. Regulations were finally laid on 13 January to come into force on 7 February, the first appointed day. Even at that stage, the forms on the DCMS website were incorrect and did not conform to the regulations. Corrections had to be made to the forms, which were reissued on 7 February.
	It proved difficult, without the forms, the regulations for the required plans, the advertising requirements and other similar details, for businesses and councils to plan ahead. In March, several interested parties, including the Local Government Association, the Local Authorities Coordinators of Local Services, the British Beer and Pub Association, the Association of Licensed Multiple Retailers, the British Institute of Innkeeping, Business in Sport and Leisure and the Association of Chief Police Officers, wrote to the then Minister to express their concern about the lack of applications to licensing authorities.
	Several issues, which caused delays and obstructions in the system, were highlighted. They included a lack of awareness of the new law among existing licence holders, especially small independent businesses, and the late laying of regulations. Many of the problems could have been avoided by postponing the start of the application process—that is, the first appointed day. That would have given more time for everyone to get to grips with the intricacies of the process.
	The hon. Member for Bath (Mr. Foster) mentioned the due date for annual fees, which are required to be paid on the anniversary of the granting of a licence. That provides no incentive for early applications. Other problems include: the absence of a slip rule in the regulations, which would allow the correction of minor errors rather than mean the rejection of applications; the implications of alterations to licences after the first appointed day, for example, the change of licensee, and the lack of clarity around aspects of the existing law, which the new Act perpetuates. I refer especially to embedded rights and restrictions about which the DCMS and the Local Government Association cannot agree even at this late hour.
	Several hon. Members mentioned village halls, including my hon. Friends the Members for Mole Valley (Sir Paul Beresford) and for North-East Bedfordshire (Alistair Burt) and my right hon. Friend the Member for Maidenhead. The Under-Secretary's concession of an offer to revisit TENs is tantamount to accepting that the Act has got it wrong. Although it is reassuring to know that he spoke to representatives of ACRE only today, they must have told him what they told us back in spring 2003. ACRE was not offered meetings then, and the Government arrogantly rejected its sensible proposals for practical implementation of the new licensing regime.
	We tabled amendments to address the key issues of the number of temporary permissions, the special case for voluntary and non-profit-making organisations, increased costs for licensing and the added administrative burdens for volunteers in village communities. The relevant amendment in Committee was No. 213, which was moved at column 456 of the Official Report of Standing Committee D on Thursday 8 May 2003. The Under-Secretary need look no further because ACRE gave us that amendment, which deals exactly with the points raised in the debate. It defines a voluntary organisation and it requested the number of TENs to be increased from five to 24. The Government conceded 12. The Under-Secretary's offer to reassess that is welcome but it is frustrating that that could have been sorted out more than a year ago.
	Many hon. Members raised the time scale for implementation, including my right hon. Friend the Member for Maidenhead, the hon. Member for Bath and the hon. Member for West Bromwich, West. The cut-off date of 6 August for transitional applications is probably set in stone at this late hour. However, the second appointed day is not. We still await the statutory instrument to legitimise the date. Since there is no time, I suggest that, before the House goes into recess, the Under-Secretary must be reserving his option to monitor developments through the recess and well into October. I predict that, if a backlog remains, thereby choking up local authority licensing committees, the statutory instrument will not confirm 24 November but a date that is, as my right hon. Friend requested, well into the new year 2006.
	We can well understand the Minister's reluctance to indicate any slippage at this juncture, but if the fears of many of those directly involved are realised, the sheer volume of applications sitting with local authorities and the cases queuing up for appeal hearings will force the Minister to do a major U-turn. As with so many sensible and practical suggestions relating to this legislation, "You heard it here first!"

Richard Caborn: When licensing and entertainment are on the agenda, we always have a lively debate. We have certainly had one this evening. There is broad consensus that the objectives of the Bill—[Interruption.] Well, the hon. Member for North-East Bedfordshire (Alistair Burt), who is one of the more measured Members of the House, made a very sensible contribution—

Alistair Burt: A short one.

Richard Caborn: Yes, but it was a very measured one. He homed in on a problem that has been discussed again this evening, namely that of village halls. We will take those issues on board through the high-level committee. One issue has been taken out of context today: Members said that there had been just one meeting with ACRE. There has been a whole series of such meetings, and ACRE welcomed the fact today that we had moved on temporary licensing. I should like to quote ACRE's newsletter of June 2005. It states:
	"ACRE (Action with Communities in Rural England) has been following the implementation of the Act and working with the Communications and Strategy Team at DCMS who have been very helpful in explaining the new processes and providing guidance and legal interpretation of the new legislation. They have set up the Live Music Forum to encourage the provision of live music in licensed premises . . . and published Countdown to explain the Act in a user-friendly way . . . Training sessions for village hall advisers have also taken place with the support of DCMS".
	I am not going to say that all the problems have been resolved. Clearly they have not, and a great deal of concern has been expressed this evening. However, let us be clear that what we are trying to do with this piece of legislation is to modernise in a way that most sensible people would want us to. We are reducing bureaucracy by merging six regulatory regimes into one. That is important for this country. This is about bringing the licensing regime into the 21st century. Central to that is the empowerment of local communities by increasing their right of intervention, which will be particularly important in licensing cases. The Act will enhance the democratic accountability and empowerment of local authorities; that is where we believe such powers should lie.
	On the problems of binge drinking in modern society, we have removed the nuclear option that existed before. We have expanded police powers the better to enable the police to respond in a proportionate way when tackling crime and antisocial behaviour. That has been welcomed by many, particularly those in the police force and in the Association of Chief Police Officers, which recently reaffirmed its support for the Act.
	The Act merges six complicated and, in some cases, outdated regulatory regimes into one. This will affect about 190,000 licensing authorities. We accept that there will be problems with implementation, but we shall be able to implement the provisions in regard to fees and to the operation of the Act, particularly for village halls and sports clubs. The hon. Member for North-East Cambridgeshire (Mr. Moss) did not choose a very good example of a club. Yesterday at Question Time, the hon. Member for Wimbledon (Stephen Hammond) mentioned Wimbledon cricket club. The club has an adult membership of 1,200, and an additional 800 junior members. It has a 9-acre site and is one of the wealthiest clubs in the country, thanks to the six-figure sum paid to it by its neighbour, the All England Lawn Tennis and Croquet club, which uses the site for car parking and corporate hospitality. It is therefore quite a wealthy club. I know that some Conservative Members might want to prosecute their case that such clubs should not pay the licence fee, but that would be wrong.
	The main reason for this major piece of modernisation is something that the Opposition have been crying out for for years, namely the reduction of red tape and bureaucracy. That is what we are going to achieve. We are moving the whole licensing regime in a direction that many people in the tourism industry have been calling for. We have debated the tourism industry many times in the Chamber, and discussed how we want to modernise it and to increase its activity. The Act provides the tools to do that.
	In relation to entertainment, which is linked to tourism with regard to central London, it is important that we modernise our licensing regimes. The chairman of the British Beer and Pubs Association said as late as 15 May this year that the Government
	"have delivered flexibility. We have seen the back of the ludicrous 11 pm closing time."
	Therefore, the Act has had tremendous support across the board.
	In terms of sports clubs, no Government have helped truly amateur sports clubs more than we have. We introduced mandatory rate relief, for which there have been calls for more than 30 years, and our investment in amateur sports clubs is second to none. If there are problems with genuine sports clubs, we will consider that, as I said that we would with regard to village halls.
	I cannot do justice to all the points raised this evening, but I will respond in writing on those that I do not cover. Let me just respond to the point made by the Opposition spokesman about 24-hour opening not being an issue. The right hon. Member for Haltemprice and Howden (David Davis), who might be the new leader of the Conservative party, said on 30 June,
	"What on earth is the Government doing? In the face of these figures, its policy of 24-hour drinking is nothing short of madness."
	And on 8 June, he said:
	"Given that a lot of violent crime is caused by binge drinking, it beggars belief that the Government are going ahead with 24-hour opening".
	How can Opposition spokesmen say that there is no disagreement about 24-hour opening? They ought to get their act together.
	As for the comments of the hon. Member for Bath(Mr. Foster)—[Interruption.] The Yorkshire pronunciation is "Bath", although I know that it is "Barth" down there. I think it is also "Bath" in Scotland. On the question of delay, the hon. Member for Bath accused me, as the then Minister with responsibility for licensing, of procrastination and of not bringing the measure forward. At the turn of the year, he changed his mind, as the Liberals are prone to do, and now argues that he wants a delay. We never know where the Liberals stand. On the one hand they argue that they want a delay, while on the other they say they do not. But I assure you, Mr. Speaker, that there is no delay. We will make sure that the Act is implemented.

Charles Walker: Will the Minister give way?

Richard Caborn: No.
	In relation to the points made about the Local Government Association, may I put on record the role that local government and the Local Government Association have played overall in the implementation of the Act? It has been professional, detailed and extremely helpful. I say that from my own experience. As I said at Question Time on Monday, in the case of my trades and labour club, of which I am the honorary president, the volunteer who runs it, Alan Jackson, an ex-National Union of Public Employees steward, has got our licence through without any help from solicitors. That cost under £200, and the club has a turnover of about £500,000 a year. He admitted that it was a little difficult to start with, but once the steward's wife helped with filling out the form, it was pretty simple. The only mistake that Sheffield trades and labour club made in its application for a licence is that while we have all these extensions, we will only be open until 5 o'clock in the morning on general election night. That is disgraceful—as we will win the next two elections, the extension ought to be until midday the following day.

Question put, That the original words stand part of the Question:—
	The House divided: Ayes 193, Noes 303.

Question accordingly negatived.
	Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
	Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
	Resolved,
	That this House commends the Government on its effective publicity campaign that has significantly increased the rate of applications to convert existing licences under the Licensing Act 2003 before 6th August; encourages remaining licensees to fulfill their responsibilities and get their applications in before that date; considers that failure to implement the Act without delay would deny local communities increased powers of intervention and improved democratic accountability with regard to licensing and deny the police the expanded powers that are vital to their efforts to tackle alcohol-related crime and anti-social behaviour; welcomes the powers in the Act to prevent crime and disorder and public nuisance, and protect children from harm; believes that the Act will benefit local communities, local economies and tourism and generate savings for business of almost £2 billion over 10 years; and furthermore, believes that the Act will be successfully implemented by 24th November 2005 and will be welcomed by industry and non-commercial organisations, including village halls and sports clubs, alike.

IDENTITY CARDS BILL (PROGRAMME) (NO. 2)

Ordered,
	That the Order of 28th June 2005 (Identity Cards Bill (Programme)) shall be amended, in paragraph 2, by substituting 'Thursday 21st July' for 'Tuesday 19th July.'—[Mr. Dhanda.]

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Northern Ireland

That the draft Traffic Management (Northern Ireland) Order 2005, which was laid before this House on 16th June, be approved.—[Mr. Dhanda.]
	Question agreed to.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Health Care and Associated Professions

That the draft Dentists Act 1984 (Amendment) Order 2005, which was laid before this House on 26th May, be approved.—[Mr. Dhanda.]
	Question agreed to.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Fees and Charges

That the draft Consular Fees Act 1980 (Fees) Order 2005, which was laid before this House on 16th June, be approved.—[Mr. Dhanda.]
	Question agreed to.

PETITION
	 — 
	Prestwick Beach

Brian H Donohoe: I wish to present a petition signed by more than 3,000 of my constituents living in the vicinity of Prestwick beach.
	The petition states:
	The Petition of Prestwick Marine Neighbourhood Watch and others, believes that there is an essential need for improvements to the seafront area in Prestwick, particularly the installation of CCTV cameras on the seafront, in order to control anti-social behaviour in that area.
	The Petitioners therefore request that the House of Commons pass legislation enabling South Ayrshire Council and the Scottish Executive to install CCTV cameras on Prestwick seafront, thereby assisting the authorities in controlling anti-social behaviour in Prestwick.
	The Petitioners further request that the House of Commons urge South Ayrshire Council and the Scottish Executive to open the seafront toilets on Links Road in Prestwick all year round, and to organise cleaning of the beach from 1 March to 31 October each year.
	And the Petitioners remain, etc.
	To lie upon the Table.

MET OFFICE (ABERDEEN)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dhanda.]

Malcolm Bruce: I believe myself fortunate to secure this debate on the proposed closure of the Met Office in Aberdeen in my constituency, just a week before the House rises for the summer. The proposal has caused widespread dismay and consternation, as the Aberdeen office is the only civilian weather forecasting operation in Scotland. I express my appreciation for the cross-party support that the campaign to have the decision reversed has gathered.
	I note with satisfaction that the Minister has made it clear that the final decision is his. I am glad that I and others will have the chance to press the case with him tonight, although the campaign will not end with this debate.
	My first concern has to do with the way that the decision has been handled. Staff learned through an internal e-mail that the option to close all six branches had been chosen by the Met Office board. Internal consultation was then initiated on the basis of a done deal. Not surprisingly, that caused anger and resentment, and the information was then leaked into the public domain rather than announced in an orderly fashion by the Met Office management.
	At present, there are six Met Office branches apart from the headquarters in Exeter. The one in Aberdeen is the only one in Scotland, and the others are in Belfast, Cardiff, Manchester, Birmingham and London. Of course, there have been management changes in the Met Office. The decision by Dr. David Rogers to leave following his marriage clearly created a hiatus. I understand that he finishes at the end of this week, and that he may have attended his last board meeting today. It is perhaps worth putting it on record that he stated in his farewell message:
	"It has been a privilege to lead the Met Office during this period of transformation"—
	an odd word, I think—
	"and I believe that I will leave the organisation strongly focused and committed to meet the challenges in the future. I would like to take this opportunity to relay again my personal thanks to all Met Office staff for helping me to determine the new strategic direction for the organisation and for putting in place a clear vision and robust plan for the future. I wish the Met Office, and its excellent people, every success for the future."
	The Minister will understand that that has a hollow ring with people in Aberdeen. After all, this time last year Dr. Rogers said:
	"I want the Met Office to work with Government to help to mitigate the impacts of severe weather. This goal can only be achieved if we maintain a significant regional presence and my wish to focus on services which improve public safety. Aberdeen Met Office is a great example of somewhere this has already happened. Everything they do is focused on protecting life at sea. This is a model."
	What has happened in the past 12 months to produce that complete about-turn? Only last September, a strategic decision was taken to transfer the shipping forecast and gale warnings from Exeter to Aberdeen. In that short time—less than a year—staff at Aberdeen have achieved a 35 per cent. increase in accuracy, for which the team recently received a performance bonus, yet management now want to transfer the service back to Exeter.
	I do not know whether the Minister will want to comment, but I can tell him that there is a suspicion that the change of policy was driven by the cost overruns in the move to Exeter. When his predecessor, Ivor Caplin, accepted the new headquarters at the end of 2003, he described it as
	"within budget and under a strict timetable",
	yet in a recent reply to me the Minister confirmed that there was a cost overrun of £7.9 million. It is estimated that the option recommended by the board—closure of all the branches—will save £3,652,000 over five years and £20,691,000 over 10 years.

Anne Begg: Has the hon. Gentleman made a similar calculation to the one I made? The savings suggested by the Met Office may not actually happen, because there is no guarantee that, if Met Office functions were centralised in Exeter, the business currently done by the Aberdeen Met Office will follow. It could go to a commercial company.

Malcolm Bruce: The hon. Lady anticipates one of my points.
	I stress that the difference between the option that the board recommends and option 3—I am not saying that option 3 is the definitive one, but it would retain Aberdeen, London and Manchester as centres of excellence—is a reduced saving of £917,000 over five years and £5.324 million over 10 years, an overall projected saving of £15.367 million. Can the Minister tell us whether it is reasonable to destroy morale and disperse expertise for a projected saving—I take the hon. Lady's point—of about £500,000 a year? That does not seem to make sense, and more to the point—exactly the hon. Lady's point—will that saving really be achieved?
	The Minister told me in a written answer:
	"It is not therefore possible to provide information on revenue generation by individual civil centres".—[Official Report, 6 July 2005; Vol. 436, c. 477W.]
	Why not? That is a trading fund and if the Government do not know what those branches cost and how much revenue is generated, how are they competent to make any decision that closing them would be a saving rather than a cost?
	I have already been told that there is a presumption of a revenue loss of only £20,000. Even that implies that more information is available than has been made public. There is evidence that the revenue loss could be far greater and could be even more than the project savings, so the net result of the decision could be to increase the deficit or the loss-making potential of the Met Office—certainly not to boost it. The Minister should take that into account. Over the last couple of weeks, we have already heard that a £1 million contract for Shell has been lost. Other contracts are being bid for, but, against the background that I have described, it is hard for the Met Office to win them, although it is determined to try to do so.
	The situation is odd, because there are three private weather forecasters with substantial staffs operating in Aberdeen and they will certainly take a predatory approach to Met Office customers. Indeed, they have already done so—Shell has been won across. Can the Minister give us even the internal estimate of the cost savings from closing Aberdeen and where the main savings will be made? I have spoken to nobody who believes that those savings will be realised or that they can be made without damaging business.
	A management document admits:
	"While there is still an important human involvement in the forecasting process this is reducing with time and needs to be used in a way that adds real value to the output. The role has evolved and forecasters are now more involved with service provision—interpreting the likely weather impacts and helping users and customers to make best use of the information available and mitigate risks."
	That is exactly the role in which Aberdeen has excelled in recent years.
	It is also interesting that the Ministry of Defence insists on retaining Met Office operations on its bases in Scotland. If a remote computer can do the job—according to the Met Office's operation in Exeter—why does the MOD need a local operation? Or is its insistence in fact confirmation that local operations really add value and qualitative information?

Michael Weir: Does the hon. Gentleman accept that many industries in north-east Scotland—fishing, oil and the growing pleasure boat sector—rely on the Aberdeen office and local input?

Malcolm Bruce: That is true. The Met Office is a public service. I realise that it is a trading fund but people perceive it as "our" Met Office providing the information we need for such activities.
	The very suggestion that Met Offices can be offered remotely without a professional customer interface is itself damaging for business. Forecasters insist that, although the Exeter technology is a huge innovation, they can still add to it and meet the needs of customers in local advice, customisation and presentation.
	Safety is an issue. In Scotland, that means mountain rescue, keeping roads open in the winter, fishing, offshore oil and gas, the pleasure boat industry and the tourist industry. The idea that Scotland, with its now fully established Scottish Parliament, should have no direct access to the Met Office within Scotland is an insult to the needs of the Scottish economy.
	Safety is not the only issue, because commercial interests are also important. The Minister should imagine an offshore oil and gas operator trying to plan the installation of a sub-sea system in the North sea. Such an operator will need a local, specific weather forecast that will enable it to determine the weather window to perform that operation. A crane barge can cost $100,000 a day, and two or three days' error in the weather forecast could cost hundreds of thousands of dollars. It would be a pity, in those circumstances, if the Met Office could not continue to provide the service that it has provided in the past.
	Forecasters in Aberdeen meet clients daily and can provide updates catered to customer needs within 15 minutes. The Met Office website, which is still effectively marketing the Aberdeen operation, makes a real virtue of that on-the-spot service. It is not credible that such a service could be provided from a location as remote as Exeter.

Jo Swinson: Does my hon. Friend agree with my constituent, Mr. Dave Clark, who relocated to the Aberdeen office when the Glasgow office closed two years ago, that the loss of the facility is likely to result in the total loss to the Met Office of highly trained staff and the detailed local knowledge of Scotland's weather?

Malcolm Bruce: I have met my hon. Friend's constituent and he has made that point to me. Many of the staff will leave the Met Office because they want to stay in that location, and competitors are keen to gobble them up because of their track record. All that is clearly demonstrated in the marketing brief for Aberdeen on the website.
	The very suggestion that Scotland should lose its only civilian Met Office operation is deeply damaging. I do not have to tell the Minister that Scotland covers 40 per cent. of the land area of Great Britain and probably more than half the maritime area—

Angus Robertson: Not on the BBC weather map.

Malcolm Bruce: I am talking about accurate projections.
	Weather can be notoriously severe, even extreme, although today was a beautiful day in Aberdeenshire. Public agencies, especially the road organisations, police, mountain rescue, air traffic, coastguards and others, all rely on weather forecasts that are accurate, flexible and use local knowledge. However good the model, there can be severe variations. The programme is based on readings at 2,500 ft. Conditions might be very different at sea level or above 4,000 ft. I can testify, as can some of my hon. Friends, that Aberdeen airport has notoriously turbulent and highly local wind patterns.
	What representations have been made to the Minister by public agency users of the Met Office? What representations have been made by the Scottish Executive? It is ironic that the very technology—it is superb—that gives a resource that can strengthen the branch operation is being used to centralise the service and pull everything to Exeter. Will that not leave the service exposed? There may be two computers, but they could both be disabled. I understand that they share cabling tunnels. Does not safe back-up justify maintaining other centres of excellence, especially when the perceived savings are relatively small and may be completely wrong? What contingencies are or could be in place if Exeter failed? Is there not a danger that public agencies will face a reduced service and possibly greater costs in getting relevant information? What account is being taken of the impact of the closure on such agencies?
	My understanding is that the Met Office trading fund has been set up to enable it to compete on fair and equal terms with the private sector. How come competitors see the need for major operations in Aberdeen? Indeed, they are poised to fill the gap if the Met Office leaves.
	In the light of these arguments, I hope that the Minister will consider all the options during the consultation. Will extra options be considered or is the consultation on the four options previously considered? Will the Minister recognise that opinion across Scotland, as demonstrated in this debate, is strongly of the view that we require our own civilian Met Office operation and that Aberdeen should be retained as our centre of excellence? To be frank, if the Minister were to close that operation, which has achieved great things in the past 15 years, it would be an act of vandalism that the Met Office would ultimately regret. It would not solve the financial problems of the Met Office but compound them. It would devalue the Met Office as a truly national British service, rather than something, however superb, based about as far away from Aberdeen as anyone can get and still be on the mainland of Britain.

Don Touhig: I congratulate the hon. Member for Gordon (Malcolm Bruce) on obtaining this Adjournment debate and I welcome the opportunity to talk about the work of the Met Office, and the Aberdeen Met Office in particular. I am grateful to him for giving me advance notice of the main issues that he wanted to raise and I will attempt to answer his points. If I fail to answer anything, I will consult Hansard tomorrow and write to him if I need to do so.
	I recently launched a consultation exercise on the options for change of the Met Office's structure. I should like to explain the background of those changes, together with the context in which they are being considered. I plan to visit the Met Office in Exeter later this month, and I will take the opportunity while there to discuss the issues involved with the Met Office executives. I have also agreed to meet representatives of the Prospect trade union, and I expect to meet parliamentary colleagues on this matter in the near future.
	I have written to the hon. Gentleman and to other hon. Members whose constituencies or constituents may be affected by any change to the Met Office's current structure and organisation. I do, however, need to make it clear at the outset that no decisions have been taken or are assumed. I have initiated a 90-working-days consultation period, the purpose of which is to find the most effective and efficient way for the Met Office to carry out its civil forecasting task. I welcome any representations, and I shall make my decision after considering and evaluating all the representations that I receive.
	The Met Office's primary function is vital: to understand the science of the weather and the environment. It does an important job in providing forecasts and information and helps to save lives and protect property. We look to the Met Office, as the national meteorological service, to provide timely, quality weather forecasts, particularly in respect of predicting and broadcasting warnings of severe weather.
	The Met Office has continually invested in improving its computer forecasts through the increasing understanding of the science and the utilisation of massive supercomputer power. That helps to maintain its reputation for excellence and to ensure that it can deliver the weather services that we require now and in the future.

Lembit �pik: As the Minister knows, I am a great admirer of weather forecasting and, indeed, of weather forecasters. On the science, does he accept that while the supercomputers are important, there will always be an element of expertise, which other hon. Members have already mentioned? The great strength of sharing that experience across the country is that the local expertise that brings in the business is effectively on site in those regions to deliver results. Will he accept representations, including from Wales, about the case for maintaining that regional expertise in its current locations?

Don Touhig: Of course I will be happy to receive representations. I know that the hon. Gentleman has a particular insight into weather forecasting that is denied to the rest of mortal man, and I congratulate him on that.
	Investments in satellites and weather radars have resulted in significant advances in how the atmosphere is observed. Advances have also been made in numerical weather prediction mathematical models. At the sametime, technological advances, particularly in telecommunications, continue to enable increasing efficiencies in the production process. While the Met Office continues to put a very high premium on the skill of people, the human role in the forecasting process has changed and continues to change significantly. The forecaster is now more focused on providing a service to customers. By interpreting the likely weather impacts, forecasters help people to make best use of the information available, especially when it comes to the risks of severe weather.
	It is important that we build on the Met Office's investment in technology, telecommunications and modelling. That is the reason for reviewing the production process and is the background to identifying the options for the way ahead. The options under consideration range from no change to the current structure and process, to the full centralisation of forecasting and the full automation of all commercial services. They also include the centralisation of production, but with the creation of two or three centres of excellence to deal with specific sectors of the Met Office's customer base and the production and services range.
	The Met Office board has expressed a preference for the centralisation of forecasting and the partial automation of forecast production for commercial services. However, I can assure the hon. Gentleman, given the concern that he has raised today, that I shall fully, carefully and impartially consider all the options that are being consulted on in the light of representations that I receive.

Alex Salmond: When the Minister says that no decisions have been made, is that a result of his ministerial intervention, as opposed to what the Met Office board has previously said? Will he take the final decision after the consultation period?

Don Touhig: The hon. Gentleman might think that, but I could not possibly comment. I say in answer to a point made by the hon. Member for Gordon that the way in which the announcement was handled, given its nature, was not one of our most brilliant successes, and I am truly conscious of the impact that the situation has had on morale. The decision will rest with me, once I have taken account of all the representations that I receive. If anyone comes up with an option that is not one of the four, obviously I will want to consider it. Governments can get things wrongnot often, but sometimes.
	I assure the hon. Member for Gordon that proposals for future forecasting have no financial relationship to the costs of the recent Met Office relocation to Exeter. The relocation was budgeted and paid for. The Met Office needs to identify efficiencies continuously so that it can ensure its future as a trading fund.
	The hon. Gentleman was concerned about why the costs and revenues of individual centres such as Aberdeen could not be identified. The answer is that the production of weather forecasts is an integrated activity that involves several agencies in the Met Office. Civil centres are one part of the process and do not operate as self-standing profit-and-loss units.
	The situation at military aviation stations is different from that at civil centres. Military pilots require direct, immediate and face-to-face briefings on the likely impact that the weather will have on the safety and effectiveness of operational sorties, so intensive consultancy occurs between the military and the Met Office.

Malcolm Bruce: Does the Minister accept that for people in the environment of the North sea, whether they are involved in fishing, maritime activities or offshore helicopter activities, the same factors apply? Their inability to call up information that the military can access is anomalous. Surely a national Met Office should provide such information to the civilian sector.

Don Touhig: Other people made that point during a discussion that I had earlier today and I shall take it on board as part of the consultation process.
	As yet, I have received no representations on the proposals from public bodies or the Scottish Executive. In respect of the operations centre that is based at Exeter, I can assure the hon. Gentleman that all the necessary business and operational resilience, and plans for continuity, are in place.
	The hon. Gentleman asked why the shipping forecast was transferred to the Aberdeen office in 2004. The decision was based on bringing together marine forecasting in a single unit. There has since been no step change in the shipping forecast, so I am not clear what improvement in accuracy is being claimed since the transfer. The proposal to consider further centralisation as one of the options builds on the process of rationalisation and improvement.
	The costs of implementing any of the options are included in the consultation document, including, for example, the small number of redundancies that could result from centralisation, which the Met Office would of course have to fund. I require the Met Office, like any other trading fund, to maximise the profit that it makes from its commercial work with the private sector. The aim is to return shareholder value to the taxpayer.
	The hon. Gentleman has raised other issues separately with me. He has expressed concern that the removal of forecasting capability from Aberdeen would diminish the quality of weather predictions. I hope that he will understand if I do not comment about that now, but I will take account of what he says as part of the consultation. Consultation with Met Office customers will, however, form a key part of the overall consultation process. I shall take fully into account any issues that they raise before I reach a final decision. I understand fully hon. Members' representations on the impact of further possible change on Met Office staff and their families. I appreciate that that is unsettling and am conscious that uncertainty is the most difficult thing for them to handle.

Anne Begg: Some of my constituents relocated from Glasgow to Aberdeen and have settled down there with their families. I re-emphasise that the uncertainty is resulting in low morale. Perhaps I can also make it clear that they are not going to move from Aberdeen again. Their expertise is likely to be lost to the Met Office and they will work somewhere else.

Don Touhig: I understand my hon. Friend's concern. However, when the Met Office relocated from Bracknell to Exeter, about 1,000 people relocated. There are difficulties and pressures, but we have to face those if we are to take the option that the Met Office board prefers.
	I emphasise that the consultation will be open, full and impartial. I look forward to meeting the hon. Member for Gordon and others who wish to make representations. As I said, the consultation will be inclusive, involving the full range of Met Office stakeholders. It is then up to me to reach a decision on the way ahead after careful consideration of all the options. It is my ambition and desire that the consultation is as wide, open and transparent as I can possibly make it.
	I pay tribute to the work of the current chief executive, Dr. David Rogers, who is leaving on 15 July. His decision to resign follows his recent marriage and his wish to pursue a career path that allows him and his wife to spend more time together. I can confirm that his decision to leave is entirely personal and is not related to the options and proposals that we are discussing.
	I have started the 90-day consultation. I am inviting everyone and his uncle to take part so that we have their views. That is the best way to proceed. At the end of the day, I will have to consider the options and come forward with a proposal. Again, when I do that, I am sure that I will be answerable to the House for my actions.
	Question put and agreed to.
	Adjourned accordingly at eighteen minutes to Eleven o'clock.